China’s top gas importer PetroChina recently declared a force majeure on gas imports according to sources.
Four industry sources told Reuters that the Chinese company issued a force majeure notice to several gas suppliers, most of them are piped-gas suppliers. 40% of PetroChina’s gas demand is supplied by overseas suppliers.
“The supply cuts will fall on suppliers proportionately but LNG (liquefied natural gas) suppliers will have a lesser impact versus those on piped gas”, said one of the sources.
The main cause behind this is the coronavirus epidemic, which has severely affected the Chinese economy and is spreading to the rest of the world. Recently the death of the first Swiss victim, a 74-years old woman from the canton of Vaud, was announced, at the moment there are more than 94,000 reported cases in the world.
“PetroChina has done its best over the past month mitigating the virus impact and tried not to issue such a notice, including diverting cargoes to India and Singapore,” said one of the sources, adding that the company will be dealing with a sharp seasonal demand fall from mid-march.
By 10:21 GMT natural gas futures gained 0.55 percent, at 1.837.
The OPEC ministers are meeting today to outline a deal for a significative oil output cut, however, it’s still not clear whether Russia will back this measure.
Saudi Arabia is aiming for a 1.2 million bpd cut, but Russia opposes such a move according to The Wall Street Journal.
According to the Iranian Oil Minister Zanganeh, the OPEC members are meeting because the outbreak has led to a decrease in oil demand, which has caused an imbalance in the oil markets.
“Coronavirus has led to a decrease in oil demand and to an imbalance between demand and supply, and in this OPEC meeting we will need to discuss this issue,” he said, adding that the amount of oil production cut still needs to be discussed.
It seems that oil futures traders are disregarding the expectations for output cuts. By 10:34 GMT Brent Oil futures went down by 0.76 percent, at 50.74, while Western Texas Intermediate Oil Futures dropped 0.79 percent, at 46.41.