RE:TWO IMPORTANT FACTORSsherry, of course the coronavirus is temporary but the question is when will it be over and how severe will it be on many levels, including on the price of oil. Also, what will be the lasting effects.
WTI dropped below $30 in 2016 for temporary reasons but the effects are still present today. One could argue that having over 400 million people under quarantine for weeks or months in a region that consumes much of the world’s oil could have a larger effect on oil than the effects that took oil below $30 in 2016. And shale was one of the reasons for oil dropping below $30 and it’s still around and strong than ever in terms of production.
I’m not suggesting we will see $30 oil. But I will suggest you get used to oil below $50 for quite some time as the effects from coronavirus will be long lasting. The Chinese and the media can control the narrative for now but the virus does not care about the narrative. The deflationary effects from this virus will likely be ignored until it no longer can. Oil and copper will be the two commodities to suffer the most for the longest time imo.