How Have Oil Prices Responded To The Concerns Around Coronavirus?

How Have Oil Prices Responded To The Concerns Around Coronavirus?

Coronavirus and its Global Impact

China recently saw the rise of a novel Coronavirus, the likes of which have never been seen before, as the number of known cases of the new virus increased by nearly 60 per cent overnight. The city of Wuhan, in China, has been said to be the origination of this virus, where most people have been affected, while within the first day itself, some cases of people affected by this virus were reported outside the city of Wuhan and other parts of China as well. The symptoms include coughs, fevers as well as breathing difficulties, and it has also been reported that this has caused pneumonia in the patients infected. Around 2744 people in China had reportedly been said to be hit with the severity of this virus, while around 80 deaths from this fatal disease have already been confirmed. Globally, some travellers have also caught this virus which were detected in their countries. Latest statistics suggest that Thailand, Australia and the United States of America have been the worst hit with 5 cases each, while Japan, South Korea, Malaysia and Singapore have also detected 4 cases in their countries. This has raised alarms around the world as countries have started preparing for any major outbreak that could have an impact on their citizens. China has closed down the two cities where there has been the most impact, and travellers are not being allowed to come and go outside of those two cities. China has extended the holiday period of the Chinese Lunar New Year. Experts have suggested that currently, there is no need to panic, but preventive care should be the utmost priority for individuals, especially older people, who this virus seems to be affecting the most.

How have oil prices performed after the emergence of the new virus?

Business world has been shaking after the outbreak of the Coronavirus, primarily because of two major reasons. First is the fact that travellers coming from China can have a huge impact on other travellers or individuals in other countries, because of which, trading for airlines has deteriorated, while logistics to and from China has been affected. Secondly, China is one of the largest importers of oil, and this virus situation has led to a major decline in demand for oil, causing big movements in oil prices. Oil prices had just started reviving post the de-escalation of the trade conflict between the United States of America and China, as this caused another meltdown of oil price. The ICE Brent Crude closed at a price of US $62.84 on 22nd January 2020 and  US $62.07 per barrel on 23rd January 2020. On 27th January 2020, at 11:05 A.M GMT, the price of ICE Brent Crude was reported to be at, US $58.58 per barrel, a decline of 7.27 per cent since 22nd January and 5.96 per cent since 23rd January. The oil price revived a little bit post the development on 27th January, but in the morning of 28th January, it reached its lowest point in the last 5 days when the prices were reported at US $58.57 per barrel as at 10:50 A.M GMT. Following this, the prices had seen some revival again by the time of writing this report, when the prices were reported at US $48.72 per barrel. Investors and speculators of the commodity especially oil is concerned by the travel advisories as well as other restrictions and any major growth in the spread of this virus could lead to a major slip in demand for crude and its products, amidst high supply.

(* Prices sourced from the chart on Thomson Reuters)

ICE Brent Crude Futures price performance in the last 5 days

(Source: Thomson Reuters) Daily Chart as on 28-January-20, before the closing of the LSE Market

With the rising volatility in the oil prices, we are going to focus our attention on the stock price performances of two major oil and gas companies trading on the London Stock Exchange.

BP Plc (LON: BP.) Stock Price Performance

As on 28th January 2020, at 11:00 A.M (Greenwich Mean Time), by the time of writing this report, the BP Plc Stock was trading at a price of GBX 480.20 per stock on the London Stock Exchange market, a jump in the value of 0.68 per cent or GBX 3.25 per stock, as opposed to the price of the stock on the previous trading day, which had been reported to be at GBX 476.95 per stock. As of the time of writing, the stock of BP Plc was reported to have been trading 4.13 per cent above the 52-week low stock price, that was GBX 461.15 per stock, which the company set on December 13, 2019. At this time, the stock price was reported to have been trading 17.69 per cent lower than the 52-week high price of GBX 583.41, that the company achieved as on April 23, 2019. The market capitalisation (M-Cap) of the stock stood at a value of GBP 96.671 billion, with respect to the current market price of the stock of the company at the time of writing this report.

It has been reported that the BP Plc stock had lost around 2.97 per cent in value, in the last twelve months, since January 28, 2019, when the stock was trading at a price of GBX 494.90 per stock at the time of the close of the market. It has also been reported that the company’s stock has gone down in the last six months, by approximately 8.88 per cent in comparison with the stock price of GBX 527.00 at the time of the close of the market as on July 29, 2019. BP Plc’s stock has been reported to have lost 0.77 per cent, in last 30 days’ time from the stock price of GBX 483.95 per stock that the stock set as on December 27, 2019.

The beta of the BP Plc’s stock has been reported to be at 1.41, giving an idea that the movement in the stock price, is more volatile, as against the movement of the comparative benchmark index.

 

Royal Dutch Shell Plc (LON: RDSA) Stock Price Performance

As on 28th January 2020, at 11:08 A.M (Greenwich Mean Time), by the time of writing this report, the Royal Dutch Shell Plc Stock was trading at a price of GBX 2146.50 per stock on the London Stock Exchange market, a jump in the value of 0.09 per cent or GBX 2.00 per stock, as opposed to the price of the stock on the previous trading day, which had been reported to be at GBX 2144.50 per stock. At the time of writing, the stock of Royal Dutch Shell Plc was reported to have been trading 0.49 per cent above the 52-week low stock price, that was GBX 2136.00 per stock, which the company set on January 28, 2020. At this time, the stock price was reported to have been trading 23.65 per cent lower than the 52-week high price of GBX 2811.38, that the company achieved as on May 07, 2019. The market capitalisation (M-Cap) of the stock stood at a value of GBP 168.810 billion, with respect to the current market price of the stock of the company at the time of writing this report.

It has been reported that the Royal Dutch Shell Plc stock had lost around 3.00 per cent in value, in the last twelve months, since January 28, 2019, when the stock was trading at a price of GBX 2213.00 per stock at the time of the close of the market. It has also been reported that the company’s stock has gone down in the last six months, by approximately 17.52 per cent in comparison with the stock price of GBX 2602.50 at the time of the close of the market as on July 29, 2019. Royal Dutch Shell Plc’s stock has been reported to have lost 5.25 per cent, in last 30 days’ time from the stock price of GBX 2265.50 per stock that the stock set as on December 27, 2019.

The beta of the Royal Dutch Shell Plc’s stock has been reported to be at 0.97, giving an idea that the movement in the stock price, is less fickle, as against the movement of the comparative benchmark index.

Comparative Share Price Chart of BP and RDSA

(Source: Thomson Reuters) Daily Chart as on 28-January-20, before the closing of the LSE Market

With Bank of England reducing the interest rates to a historic low level, the spotlight is back on diverse investment opportunities. 

Amidst this, are you getting worried about these falling interest rates and wondering where to put your money?

Well! Team Kalkine has a solution for you. You still can earn a relatively stable income by putting money in the dividend-paying stocks.

We think it is the perfect time when you should start accumulating selective dividend stocks to beat the low-interest rates, while we provide a tailored offering in view of valuable stock opportunities and any dividend cut backs to be considered amid scenarios including a prolonged market meltdown.

To know more about these dividend stocks, click here

CLICK HERE FOR YOUR FREE REPORT!
   
x
We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it. OK