Total chief warns of coronavirus impact as annual income falls
The chief executive of French oil firm Total today warned that coronavirus would have a significant impact on oil demand as the company reported a 13 per cent fall in annual income.
Patrick Pouyanne said that the outbreak, which has killed 563 people thus far and knocked oil prices by about $10, said the impact would be “substantial, [as] China will reduce its consumption”.
Pouyanne’s comments follow those of BP’s former finance chief Brian Gilvary, who said that global demand could be cut by up to 0.5 per cent, nearly 500,000 barrels per day, over the whole year.
Since the beginning of the month, analysts estimate that China’s oil imports have fallen from 11m barrels a day to somewhere closer to 7m as its economy stalled.
Despite its caution, Total increased its dividend for the final quarter, despite reporting flat fourth quarter profit.
In the final three months of 2019 the French firm posted €3.2bn in profit, with production of hydrocarbons up eight per cent to 3.11m barrels a day.
The fall in Total’s full year profit was largely attributed to falling prices in both oil and gas. The average price for a barrel of Brent crude in 2018 was $71, but in 2019 this fell to $64.
European gas prices also fell nearly 40 per cent over the course of the year.
Oil producer group Opec have been meeting over the last two days in Vienna to discuss how it can limit the damage done to markets by the coronavirus output.
Despite rumours to the contrary, Naeem Aslam, chief markets analyst at Avatrade, said that “traders aren’t expecting any action from the committee.
“Russia is simply not in a mood to cave in despite the fact that there are serious concerns that the outbreak of the coronavirus is going to impact global growth. So far Saudi Arabia has failed to strong-arm Russia and this equates to no cuts in oil supply.”
Oil prices continued yesterday’s rally this morning, with Brent crude rising over 1.2 per cent on rumours of an effective treatment for the virus.