Market News & Analysis

Top Story

OIL MARKET WEEK AHEAD: The Real Tally of the Virus

Just as China started containing the spread of the coronavirus, two new flash zones opened up in South Korea and Iran, where the number of cases has surged over the last three days. Even before the virus jumped countries, South Korea had to stop some of its car production as the supply of key parts from China was hampered by the outbreak. If the number of cases continues to rise, there could be further repercussions on the country’s manufacturing as Daegu City, the epicenter of Korea’s outbreak, hosts several large industrial complexes with factories for Samsung and Korea’s steel producer Posco.

For oil investors, it is now a matter of trying to assess how much damage to demand all of this will cause before the outbreak reaches a turning point. So far we only have estimates: OPEC now forecasts an 18% decline in this year’s demand, while Goldman Sachs expects Brent crude prices to average $10 less than previously forecast, now seen at $53/bbl.

However, the week ahead will provide first solid data for analysis. China’s industrial data for January released on Monday will not be of much help because it will show a decline in production that would have been caused by the planned week-long closure for Chinese New Year but February manufacturing PMI, which will be published on the night of 28 February, will provide a clearer picture. Even before the coronavirus, Chinese manufacturing PMI was teetering on the edge of growth with a reading of 50. Now it is expected to have dropped to 45, indicating a worrying slide into contraction.

Source: WHO, BBC

OPEC back to its original schedule

Russia successfully managed to avoid all of OPEC’s nudges this month to cut production in order to balance out the virus-induced loss in crude demand. Instead OPEC is back to its original schedule and will meet in Vienna on the 5th and 6th of March. An eventual production cut seems an inevitability at this stage, but Russia’s reaction so far raises doubts over whether OPEC+ will be able to reach a collective agreement or if Saudi Arabia and OPEC members will be left to carry the cuts alone. The decision will be a difficult one for Saudi Arabia to make as Russia has been increasing its sales into China sharply over the last few years and is directly competing with Saudi Arabia for market share.

So far Russia has argued that it first needs to see how much damage the virus will inflict on China’s economy. We could be still weeks away before knowing the answer to this question as Chinese factories are now coming back on line after a couple of weeks of closures but are far from operating at full capacity with workers discouraged from travelling or still infected.


After years of toing and froing on Nigeria’s petroleum legislation caused by friction between the country’s president and government ministers, the country is now finally within reach of workable regulation. This week the House of Representatives passed the bill which is expected to be signed into law by the President in May. The absence of legislation has slowed down the development of the country’s deep oil offshore fields as oil majors were reluctant to proceed with massive investments without being certain about the financial implications of the new regulation.

However, the timing of the bill is not working in the country’s favor. The deep sea oil fields were scheduled to start producing oil in 2023 but are financially only feasible at prices of above $60/bbl. While the country dragged its feet with the oil regulation, the majors have started looking for projects in other African countries with less cumbersome legislation and may not return to Nigeria in the near future. In February Wood McKenzie published a report saying that the country’s output could decline by 35% if the oil regulation reforms are not completed, costing Nigeria more than $2bn in potential oil revenue. The three major projects by Shell, Total and ExxonMobil are now expected to be delayed between two and four years and come on line only from 2025 onwards.




Monday 24 Feb

China Jan industrial production


Monday 24 Feb 09.00

Germany Feb IFO business climate


Tuesday 25 Feb 07.00

Germany Q4 GDP


Tuesday 25 Feb 13.55

US Redbook index


Tuesday 25 Feb 21.30

US API crude oil stocks


Wednesday 26 Feb 12.00

US new home sales


Wednesday 26 Feb 15.30

EIA crude oil stocks


Thursday 27 Feb 10.00

EU Feb business climate


Thursday 27 Feb 13.30

US initial jobless claims


Thursday 27 Feb 13.30



Friday 28 Feb 13.30

US trade balance


Friday 28 Feb 18.00

Baker Hughes US rig count


Friday 28 Feb 20.30

CFTC oil net positions


Saturday 29 Feb 01.00

China Feb manufacturing PMI



This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

GAIN Capital Singapore Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the GAIN Capital group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), GAIN Capital Singapore Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact GAIN Capital Singapore Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither GAIN Capital Singapore Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

GAIN Capital Singapore Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit for the complete Risk Disclosure Statement.

Important Notice:

Cryptocurrencies are not legal tender currency and trading of derivatives on Cryptocurrencies are currently not covered under any regulatory regime in Singapore. Consequently, investors should be aware they do not have protection under the Securities and Futures Act (Cap. 289). Please ensure that you are fully aware of the risks.