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Are we going to see Brent back under $70 for a period of time whilst this Delta variant is the media's focus fear mongering headline ? Its getting boring now
Could get genuinely bad for markets if China can’t control the spread. They will already be destroying significant demand with the strong restrictions coming in.
They won’t care what damage they do to the economy because their primary aim is to keep control of the populace.
Don't be stupid MRC its the complete opposite to that, they dont care what happens to the people as long as there economy doesn't take a hit.
I still believe the market cap will be over £500m once GE is signed.. 26.5p
33p sounds plausible once evidence of deleveraging makes it's way onto a RNS.
KO - the power comes from control. They have shown recently that they will maintain control at the expense of the economy. E.g. tech stocks
Absolutely hitman - Still far too much risk priced in here.
If there was a Covid outbreak in China, it would depend on what part of the country was affected.
It could do damage to the economy if it was in the high tech industrial south but elsewhere it would be more of a local issue.
At the moment, most of the southern cities are unaffected and nationally cases are very low. Also its far more likely that the population in the affluent southern industrial cities have been vaccinated, so assuming the Chinese vaccine is effective against the Delta Variant then the effects of even a widespread outbreak would be minimal.
Chilting - no country has been able to resist delta.
The Chinese vaccines have been shown to be quite ineffective, and the majority of the population are not vaccinated.
We are already looking at cancelled domestic transport and stay at home.
It will be a lot worse than India’s outbreak IMHO.
Also you say “if there is an outbreak”
There already is IMHO. But they are going to hide the facts and maintain the illusion that they are in control for as long as they can.
Ha Ha MRC Sold out so now posting everything he possibly can to de-ramp.
And he had a go at chilting for it
Hypocrisy at its very best
Yep, the current leg down in Brent is mostly to do with Covid concerns in China and its impact on oil demand with their ongoing localised lockdowns - a bit like what happened with India back in April/May. Their vaccine just doesn't stand up to scrutiny from Delta and voila, we're having these localised lockdowns. This too shall pass, eventually, but there will be volatility in the interim. C'est la vie.
The Chinese vaccine may be less effective in stopping people getting the Delta variant but the most significant thing is that it does stop serious symptoms developing - so it seems that it is just as effective as the Western Vaccines from that point of view.
Also China have vaccinated a higher percentage of it population than the US so its unlikely that we will see an outbreak that has severe economic consequences, Oil demand is therefore unlikely to be affected.
https://edition.cnn.com/2021/08/02/china/china-covid-delta-challenge-mic-intl-hnk/index.html
http://news.sina.com.cn/c/2021-07-23/doc-ikqciyzk7110030.shtml
Hi Chilts - sorry that doesn’t seem plausible to me. How can demand not be affected by mass lockdowns of millions of people? We need demand to be growing as OPEC add back the barrels. We are probably a couple of months away from a crest of a wave in China.
I’m not convinced we know enough about the Chinese vaccine to say it stops serious disease.
Also remember that the West has a population with much better immunity as we have let it run wild through our populations across 3 waves, only restricting life to keep hospitals from collapse. Even if China have 50% double vaxxed they are still in big trouble.
In the UK there are around 90% of the population with anti bodies from infection or vaccine. I bet it is no more than about 50% in China.
Grow up KO.
I am still invested, though as I say have taken some off the table for my own sanity.
Short term POO weakness but ENQ is a great business now and will get to 30p whether POO is at $60 or $80.
Might just take a little dip as this latest Covid worry works through and POO stabilises.
The Chinese vaccine does work. It is the main vaccine used in Morocco and has stopped mass deaths in the over 50's. Around 60% of adult population been vaccinated.
China can easily ramp up vaccination across rural areas and prob are doing right now.
India seems to be over the worst . Autumn POO will be on a roll !
During India’s delta wave there was around a 20% reduction in demand.
I would imagine it will be similar for China, which would equate to 2 million barrels per day surplus for say a month or 2 before recovering.
It’s not immaterial and that is why the POO is falling. I don’t think that is priced in yet either so it will keep falling if things do head down this road.
Maybe true Mrc.
However a few more attacks from Iran. A sunk tanker or two.
Israel strikes Iran's nuclear research labs etc and POO will shoot up. Who knows what's coming next ? Maybe a slap around the back of my head from the wife !
I'm staying INVESTED .
Dont forget that the underlying demand is increasing day by day, year by year, as more and more people get out of poverty! In addition the number of adults in the world increase every year.
Looking outside China, will there be more restrictions elsewhere? Any place where things will rather tren back toward some kind of normality and hence demand increasing?
The Chinese had a working vaccine in peoples arms before we did - looking at news reports from China, they are at the stage where they are now moving on to vaccinate children, just like we are in the UK - the Chinese are not stupid, they know what they have to do to stop another major outbreak and as Jan confirms, their vaccine DOES work against the Delta Variant.
So this scare over reduced oil demand from the Chinese as a result of Covid is just a falsehood.
More good news - even India is off the red list.
https://www.bbc.co.uk/news/business-58079107
Chilting - they have cut transport links already. The demand is gone. They are estimating 5% drop in demand currently.
https://www.worldoil.com/news/2021/8/4/covid-resurgence-in-china-drives-global-oil-demand-concerns
Will it get worse? I don’t know.
The article is saying that 2 of the affected areas are major manufacturing centres.
5% drop in Chinese demand is no more than 1% of total world demand. Hardly a major issue unless the situation gets far worse; unlike Australia the Chinese have vaccinated much of their population.
Nick - sellers need to find buyers for that extra 1%. The cost they are willing to pay for it sets the price of all barrels.
It’s basically going to go in storage because the demand elsewhere can’t use it. The market will price this in based on expected excess volumes that might get built up whilst supply exceeds demand.
If the markets in general turn pessimistic then it could fall a lot.
Wtfdik though
I agree the fall on China is overdone, and the pattern is a classic falling EW5, but the low trend price suppport is about $66 so maybe one more shakey day then back up we go. Oil production reportedly short until mid 2022 so no reason oil should not go back on the rise short term and therefore this should go up as well.
Have to add I think the last small rise is not to do with oil price. There are a growing number of mid and large gaps going on a runner and I suspect this is joining the pack.