crude-oil-second-wave-coronavirus

Is Crude Oil Market Ready for Second Wave of Coronavirus?

April 2020 crude oil demand fell to 8.0 MMb/d due to the first wave of Coronavirus, and many market analysts have started to model how the second Coronavirus wave will look like for the global crude oil market.

Since April 2020, the crude price differentials have narrowed as drivers and freight demand have jumped higher. The super contango crude spreads that we have witnessed back in May 2020 have since flattened, and forward price curves are flat and with slightly backwardation patterns. The less contango the curves usually translated to lower freight costs, and that’s good news to logistics sectors and even broader sections like eCommerce and manufacturers.

The crude market looks fairly balanced with physical and financial Brent differentials narrows based on ICE indexes at the time of this writing. However, with the United States COVID cases on the rise and WTI fluctuating between $38 and $40. It will be interesting to watch the weekly crude and petroleum inventory levels in the coming weeks.

Most market analysts already factored in a high chance of a coronavirus, the second wave hitting the global market starting as early as November 2020, peak at February 2021, and starting to recover around May 2021, which follows the same pattern as the first coronavirus first wave.

Second Wave Coronavirus for Crude Oil Market

Various models have predicted that coronavirus second wave reduces the global demand to 8.5 MMb/d, 0.5 MMb/d higher than the first wave. If that holds, the global market will repeat similar price reactions to the first wave. Whether this holds true or not, we are dependent on the models’ algorithmic variances and assumptions.

The models we used at EnHelix use both SVM and RFC with historical price and supply data and also included Spanish flu historical data. At a side note, we have also include COVID daily confirmed cases at major cities and media news sentiment analysis as part of our AI modeling. We would report back in 2021 if our models predicted the global demands correctly.

ETRM Software and Technology

EnHelix-AI-and-Big-Data-Modeling
EnHelix Asset Optimization on Coronavirus Second Wave

EnHelix software is the first to incorporate artificial intelligence into CTRM/ETRM to help energy companies navigate unprecedented times like this. The modules that we used in EnHelix ETRM is the Asset Optimization module that combines historical and use the power of Big Data and Artificial Intelligence to present different scenarios to stakeholders visually.

Additionally, EnHelix is the award-winning ETRM software that hosts on cloud and desktop for pre-trade to post trading processing and robust logistics and accounting functionality.

What is the global crude demand for Coronavirus second wave?

Various models have predicted that coronavirus second wave reduces the global demand to 8.5 MMb/d, 0.5 MMb/d higher than the first wave. If that holds, the global market will repeat similar price reactions to the first wave. Whether this holds true or not, we are dependent on the models’ algorithmic variances and assumptions.
crude-oil-second-wave-coronavirus

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