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Watch Global Gasoline Demand Destruction Live

Mar. 03, 2020 11:28 AM ETUSO, OIL-OLD, UCO, SCO, BNO, DBO, DTO, USL, OIL, OILK, OILX15 Comments
Robert Boslego profile picture
Robert Boslego


  • GS estimates Chinese oil demand destruction by 4 million barrels per day.
  • Oil investors and traders need to monitor gasoline consumption trends globally.
  • Coronavirus maps and traffic data are useful real-time tools.
  • The virus has reduced gas demand in China.
  • And the spread is reducing gas demand in other places.
  • Looking for a helping hand in the market? Members of Boslego Risk Services get exclusive ideas and guidance to navigate any climate. Get started today »

It has been widely reported that the coronavirus, COVID-19, has disrupted oil demand in China. Goldman Sachs (GS) estimated that it has reduced demand by 4 million barrels per day.

However, in contrast to supply shocks, which can be measured by oil tanker movements, for example, demand shocks are much harder to quantify. Weekly data are available for the United States, but data quality and frequency are much lower for the rest of the world.

For example, demand data from the U.S. Energy Information Administration (EIA) for the week ending February 21st showed total U.S. product supplied, a proxy for consumption, showed a 3.2% decline in the year-to-date. For the last 4 weeks, it showed jet fuel demand down 8.3%.

To get some visibility on real-time demand impacts, I find two tools to be particularly helpful, though imperfect. There can be value in imperfect information.

The first tool comes from Johns Hopkins University (JHU) Center for Systems Science and Engineering (CSSE). It shows global cases plotted on a world map. This helps identify the areas to search for demand destruction.

The second tool is provided by TomTom N.V., a Dutch multinational that engages in the design, development, and sale of navigation and mapping products, software, and services. The TomTom Traffic Index provides detailed insights on live and historic road congestion levels in cities around the world. Traffic congestion provides a real-time indication of driving levels and an approximation of gasoline demand impact.


The virus has spread through much of eastern China from its epicenter, Wuhan, site of the Wuhan Institute of Virology, the first biosafety level 4 (BSL–4) laboratory to be built in mainland China.

The TomTom Traffic Index shows congestion in Wuhan over the past 7 days compared to the same days in 2019. The percentages on the scale

To guide investors who are interested in profiting from outstanding opportunities in the energy sector, I provide a service on Seeking Alpha’s Marketplace oriented toward individual investors, Boslego Risk Services. A long/short Model portfolio is continuously updated, along with on-going analysis of the oil market.

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This article was written by

Robert Boslego profile picture
Seeking Alpha Marketplace Premium Service: Boslego Risk Services.Managing Director, Boslego Risk ServicesHarvard College, Economics (Honors), BA Undergraduate thesis: "OPEC Pricing Strategy." Harvard Business School Case Study: "Industrialized World and Oil."Stanford University Graduate School of Business, MBA I founded Boslego Risk Services and became a recognized expert in the area of energy price risk management (hedging) and trading, providing oil and natural gas hedging strategies to major oil companies such as Exxon, Shell, Mobil, Chevron, Texaco and Phillips; to the national oil companies of Norway, Venezuela, Mexico, Canada, France and Italy; to major users of energy products, such as Delta Airlines, United Airlines, Burlington-Northern Railroad, and Canadian Pacific Railway.I also provided frequent market assessments and recommended trading positions to major trading firms, such as Enron, Phibro, Sempra and Vitol, and to large hedge funds.As the recognized expert in energy hedging, I was selected by the former president, John Treat, of the New York Mercantile Exchange (NYMEX) to write the chapter on hedging in his book, Energy Futures (1990, 2000).

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (15)

A VLCC just reached an all-time high charter. Why? All those Cosco ships are available.
Interesting development. Saudi Arabia will increase oil production starting in April. The Oil War has begun. There might be demand destruction but can countries pass up $20 oil? They will store it offshore. What will this do for tanker companies? US Shale companies are in trouble?
Robert, I noticed your spirited debate with Mintzmyer. Oil is getting its ass kicked. OXY down 12% was eye opening. Oil is in Contango. Is there a storage play with tankers mainly the VLCC’s? Are traders going to sell oil at $40? Tanker companies can store millions without bunker costs. It could be hundreds of millions if China reduces consumption. It seems the US and Russia will not reduce output with US oil companies on shaky ground. Tanker companies can just store oil in lieu of fixed charters.
Pooh_Lover profile picture
Robert, it must be hard being right all the time. You've called this market. Perma bulls got slaughtered and are still arrogant about it.
waqas111 profile picture
Factories opening up in China will lead to more cases I'm afraid..
Some companies are offering bonuses and free travel costs to people to return to their factories and resume work. It's a huge risk. we will see in few weeks what will happen. A place I think called Guangdong, more than 6 million people have returned and will start work. That is a very large number..and so is the risk..
Guangdong used to be called Canton where the Cantonese come from. I was there in 1987. From Hong Kong I went to Canton one day by train. Another day, about two weeks later, I went to Canton from Hong Kong by boat on my way to Beijing. In 1987 the air in Beijing was still clean. I don't care to see it now.

API reports
Derek Teed profile picture
"The TomTom Traffic Index shows congestion in Wuhan over the past 7 days compared to the same days in 2019."

I am certain this statement is incorrect. The same days of the week do not line up year over year. Feb 24 was a Sunday in 2019 and a Monday in 2020. Two entirely different driving patterns between Sunday and Monday.

I've been looking up and down TomTom and cannot confirm anywhere that it is comparing the past 7 days to those same days in 2019. The verbiage is not saying average congestion for the equivalent week or for the month of February in 2019. The verbiage is pointing at "Average congestion in 2019" in its entirety. I think you are possibly comparing all of 2019 to the driving patterns of late February in China.

Seattle congestion over the last week is actually higher than average and they are the epicenter of the US coronavirus.

Everything else being equal I think the congestion patterns might show something, but the data has some noise in it.
Robert Boslego profile picture
You may be correct that it is the average for the time and day of the week in 2019 because the congestion levels vary by day of the week and are much lower on Saturday and Sunday.
Good and useful information from Tom Tom. It can be used for several other purposes.
fascinating tools Mr Boslego.
I learn something every time I read your articles, this time even more than usual...
Robert Boslego profile picture
thanks you
Skate to where the puck is going to be, not where it has been.
Pooh_Lover profile picture
@Mr Chow 100% correct. Earnings will be moderate to bad Q1. The real crap is going to hit the fan IMO when these companies do forward guidance because it will be bad. Real bad. Q1 we had China and supply chains beginning to get disrupted. Q2 will be entire world trying to fight this thing off with travel coming to a stop.

My wife has a huge conference in Orlando in a couple weeks. Had a conference. Today it got cancelled. I have numerous customers traveling abroad in the coming months. Were travelling abroad I should say. Things are just getting started. The fun will begin at Q1 earnings.

We agree with your statement but have opposing outcomes. That said, I was a buyer during the massacre last week but then again I got MO below $39 and 21% monthly payer VET at $9.76. Some of these were too good to pass up.
Not to worry, soon things will change in China: Seven provinces in China allegedly plan to invest the towering sum of USD 3.5 trillion in infrastructure in an effort to restart the economy following the coronavirus outbreak, reports Arrow Shipbroking Group citing a Chinese media.
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