The spread across the world of the Chinese coronavirus has probably wiped out global crude oil demand growth for 2020, but in something of an irony it's likely to be China that will be responsible if any increase is eked out.
There is little doubt that the coronavirus, which started in the city of Wuhan and has killed more than 2,700 people so far, will hit Chinese crude consumption this month, and likely into March and April.
But it also seems to be the case that Beijing may finally be getting a handle on containing the virus, just as it ramps up in other countries, most notably South Korea, Japan, Iran and Italy.
This makes it likely that Chinese refiners will be keen to resume operations that have been curtailed because of the virus, but this could be delayed until April.
There are two reasons for the delay in resuming full crude processing in China. Firstly, fuel inventories have to be drawn down and secondly March is traditionally a month when several refiners undertake scheduled maintenance, as it falls in the shoulder season between peak winter and summer demand.
There is also a difference between Chinese domestic fuel consumption, and the country's overall crude demand, given Beijing is still filling its strategic petroleum reserve, and refiners are also boosting exports of refined products.
This means that while some estimates suggested Chinese fuel demand fell by up to 4 million barrels per day (bpd) this month as the coronavirus led to the quarantining of entire cities, the hit to crude imports may not be so dramatic.
China's crude imports are expected at 10.53 million bpd for February, down from 10.69 million bpd in January, according to a report on Wednesday by Refinitiv Oil Research.
A mere drop of 160,000 bpd isn't much of a dent to demand, and if the final tally is in line with the Refinitiv forecast, it will put some of the more doom-laden predictions about China's crude demand into perspective.
March, April Weakness?
However, it's likely that the bigger hit to China's oil imports will come in March, and possibly extend into April.
Refinitiv vessel-tracking data is showing 136 vessels carrying 177.6 million barrels are already heading to China and expect to unload in March, already over half the expected deliveries in an average recent month.
This will also be far from the final total, given that more cargoes are likely to leave Middle Eastern and Russian ports in the next two weeks and still have time to reach China before the end of March.
What the vessel-tracking and port data is suggesting is that while China's imports of crude may be softer than they would have been in the absence of the coronavirus, they are still holding up pretty well and the drop is nowhere near as severe as the hit to domestic fuel consumption.
If Chinese crude imports do start to recover from April onwards, it means the market focus is likely shift to how big the impact of the coronavirus will be on the rest of the world.
With more new cases being reported outside of China for the first time on Wednesday, the risks are rising that the coronavirus may reach vulnerable countries in Africa and the Middle East, and could strain health systems even in developed countries.
It's still a wait-and-see approach, but if travel bans and quarantine measures become commonplace across Europe, even forecasts for zero global oil demand this year may prove optimistic.
However, the epidemic, along with fears that it may become a pandemic, is driving a slump in crude prices, with Brent futures dropping as low as $52.57 a barrel in early Asian trade on Thursday, the weakest intraday price in a year, and putting the decline since the peak this year on Jan. 8 to nearly 27%.
Assuming China does contain the virus and its economy starts to recover as stimulus hopes are delivered, the current weak crude price may also drive increased buying for its strategic stockpiles.