Oil Looks Into Abyss as Virus Threatens Demand Contraction
- Vitol is modeling one scenario based on a global recession
- Oil hedge funds buy $40 put options to profit from demand hit
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Flights canceled in Europe, schools closed in Japan, towns quarantined in Italy and panic in California. The coronavirus crisis has gone global, and with it, its impact on energy demand.
For only the fourth time in almost 40 years, oil consumption may not grow at all in 2020, according to a growing minority of traders, investors and analysts. For OPEC, gathering in Vienna this week to discuss production policy, it’s a nightmare scenario likely to force the cartel into deep output cuts.