Not a pretty picture
Oil is down another 3% today and is closing in on the lows from the start of the month. For me, crude is particularly vulnerable to coronavirus. There is so much supply out there and companies aren't going to stop pumping because they have bills to pay, and some of them have already sold the crude into the futures market.
Meanwhile, people will stop driving, planes will stop flying and demand for oil could drop dramatically. There is nowhere to store the excess crude with stockpiles already at high levels.
With some hard assets, storage isn't a problem so the market can adapt but an extra 2 million barrels of oil per day isn't going to find a place to hide. So what's the clearing price of those extra barrels. Are you going to be driving/flying more even if the cost is half-price in the middle of a pandemic?
The low in the 2018 trade panic was $42 but in a global pandemic, a return to the $20s can't be ruled out. If that comes, the debt market is going to crumble.
For now, the Feb low of $49.31 is the level to watch.
