The Chinese epidemic that caused by the deadly coronavirus 2019-nCoV, has led to lower oil prices on major world exchanges. For example, on January 27, the ICE Futures London Stock Exchange recorded a decrease in the cost of Brent crude oil futures by 2.3% to $ 59.37 per barrel.
TeleTrade analyst Sergei Rodler explains to UA-Times all commodity assets are getting cheaper. For example, copper is a metal that is used in industrial production and construction of infrastructure facilities.
“Investors fear that the isolation of cities, the prohibitions on air travel, and the closure of entertainment centers will inevitably have a negative effect on the Chinese economy and lead to lower demand for most groups of goods used by Chinese companies,” the expert said.
According to him, oil prices increased the panic of investors. So, over the past 6 trading days, minus 12% was recorded. and the estimates, canceled flights can lead to a decrease in oil demand by 260 thousand barrels per day.
“It’s enough to recall that the global consumption of raw materials is 97 million barrels per day, so that investor concerns begin to seem overly exaggerated, ” Rodler said.
Nevertheless, until speculators are sure that the virus has been taken under control, the fall in prices will continue, the expert said. But no serious consequences are expected for the real world economy, as well as for the Ukrainian economy.
“The price of oil is close to the values of November last year, which means that one should not expect any tangible drop in gas prices. One gets the impression that the worst is over and quotes will soon find the bottom. Given the overall market situation, the price of a barrel of $ 59-60 looks more fair, ” TeleTrade reported.
The negative effect is observed only in financial markets, while there is no reason to worry about the real economy, Perhaps the closure of public places during the Chinese New Year celebration may adversely affect China’s GDP due to reduced consumer activity, but it will take time to calculate the losses. the expert noted.
“Ukraine exports $ 3.29 billion worth of goods to China. These are mainly agricultural products. This is not enough on the scale of a country such as China, which has recently committed itself to purchasing $ 200 billion more products from the USA. Chinese problems should not hurt Ukrainian exports, ”Sergey Rodler added.
It is also worth noting that the main role in the cost of gasoline is played by taxes and other obligatory payments, while short-term movements in the market – and oil is an extremely volatile asset – do not really matter.
“Oil companies are building long-term strategies and no one will lower prices because of temporarily lower prices. the prices actully are tied to the value of the euro, so in this situation on foreign markets, we can expect a slight increase in the cost (1-2 hryvnas) due to the depreciation, ”Rodler said.