Yesterday, I was posting stories about the Saudi decision to pump more oil and adjust its pricing. This morning, the price of oil had fallen by around 25% and could be headed lower. Crude was already under pressure as a result of lower demand because of coronavirus and flagging economies – especially in Asia and Europe. The lack of an OPEC plus agreement though was widely viewed as signaling a price war on top of that. What impact will this have on US shale production? How low can oil go? There are many questions that are difficult to answer at this point.
Coronavirus is big news. While the flu is ravaging entire nations like the US where 34 million have had the disease and over 18,000 died from it so far this flu season, it seems that Coronavirus creates more fear – possibly because it is still an unknown to some extent. But it is the reaction to it as opposed to the virus itself that appears to be causing the disruption at the moment. It is having an impact on everything from demand for commodities, to supply chains to how software firms conduct marketing. In some quarters, it is also being celebrated as a ‘having a silver lining as a way to rid the planet of older, man made climate change deniers by their selective death (as older people from the virus) and also as an issue that will reduce CO2 emissions. On the latter point, I suspect their celebration is a tad too soon. Firstly, economies like China will double down to restore economic growth and secondly, I suspect people will opt to self transport in their car over public transport where the risk of infection is greater. Lower fuel prices may help with that decision.
Having worked at a commodity trading firm myself, I can imagine what a week this will be for traders and risk managers. Despite falling oil prices, I suspect the need for agile CTRM and risk management solutions is only increasing under such volatile conditions. Last week, Brady already started a campaign around the impacts of the virus with a focus on credit risk as well as broader trading & risk issues. This morning, I was discussing with Mark Tredway of Enuit how webinars are suddenly a popular way to deliver marketing and business information in Asian software markets, which in the past, have not been a place where webinars were very popular. Change is everywhere.
Plainly, we are in the midst of a period of sudden and rapid change coming from many sides. Much adaption and innovation will need to occur under such circumstances. This week will be something of a ride for many in the industry. It is only Monday (and a full super moon – the worm moon) and Friday is the 13th!
