Oil. Picture: REUTERS
Oil. Picture: REUTERS

Singapore — Oil prices on Monday extended their decline from an early January peak above $70 as the spectre of excess supplies loomed over the market after the spreading coronavirus outbreak hit demand in China, the world’s largest oil importer.

Brent crude hit a low of $53.63 a barrel and was at $54.09 by 0100 GMT, down 38c. US West Texas Intermediate fell 38c to $49.94 a barrel after striking a low of $49.56.

Worries over supply were not alleviated on Friday when Russia said it needs more time to decide on a recommendation from a technical committee that has advised the Organisation of the Petroleum Exporting Countries (Opec) and its allies to cut production by a further 600,000 barrels per day.

Russia energy minister Alexander Novak said Moscow needs more time to assess the situation, adding that US crude production growth will slow and global demand is still solid.

The proposal for the further cuts “failed to alleviate the pressure on oil, in part because the proposal has yet to be formally discussed by Opec ministers and because Russia continues to push back against further cuts”, said Stephen Innes, chief market strategist at AxiCorp. “If the cartel fails to reach an agreement, there will be more pain to come in oil [on the] downside.”

Oil traders also said they are concerned that the proposed reduction would not be sufficient to tighten global markets.