Oil slips as traders worry about effect of coronavirus
18 February 2020 - 08:43
byJessica Jaganathan
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Singapore — Oil prices fell on Tuesday, tracking losses in financial markets on lingering concerns over the economic impact of the coronavirus outbreak in China and its effect on oil demand.
Brent crude was at $57.07 a barrel, down 60c, or 1%, by 3.50am GMT, while US West Texas Intermediate crude fell 38c, or 0.7%, to $51.67 a barrel.
“Oil prices remain heavy as energy traders may have been overly optimistic as to the crude demand impact of the coronavirus, and in fading optimism that Opec+ will come through with deeper production cuts in March,” said Edward Moya, senior market analyst at Oanda.
“Optimism that China would see a return to normalcy in travel and trade next quarter was probably wrong. The rest of world is exercising caution on virus spreading fears and that will do no favours for crude’s demand outlook,” Moya said.
US stock futures slipped from record levels on Tuesday after Apple, the most valuable company in the USs, said it will not meet its revenue guidance for the March quarter as the coronavirus outbreak slowed production and weakened demand in China.
The number of new coronavirus infections in mainland China fell below 2,000 on Tuesday for the first time since January, Chinese health officials said, though global experts warn it is too early to say the outbreak is being contained.
The International Energy Agency (IEA) said the virus was set to cause oil demand to fall by 435,000 barrels a day (year-on-year in the first quarter, in what would be the first quarterly drop since the financial crisis in 2009.
Still, with some Chinese independent refineries snapping up crude supplies after being absent from the market for weeks, traders held out hopes that China's demand could recover in coming months.
Investors are also anticipating that the Organisation of the Petroleum Exporting Countries (Opec) and its allies, including Russia, will approve a proposal to deepen production cuts to tighten global supplies and support prices.
The group, known as Opec+, has an agreement to cut oil output by 1.7-million barrels a day until the end of March.
Oil output from Libya has fallen sharply since January 18 because of a blockade of ports and oilfields by groups loyal to eastern-based commander Khalifa Haftar.
Libya’s National Oil Corporation (NOC) said on Monday that oil production was at 135,745 barrels a day as of Monday, compared with 1.2-million before the stoppage.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Oil slips as traders worry about effect of coronavirus
Singapore — Oil prices fell on Tuesday, tracking losses in financial markets on lingering concerns over the economic impact of the coronavirus outbreak in China and its effect on oil demand.
Brent crude was at $57.07 a barrel, down 60c, or 1%, by 3.50am GMT, while US West Texas Intermediate crude fell 38c, or 0.7%, to $51.67 a barrel.
“Oil prices remain heavy as energy traders may have been overly optimistic as to the crude demand impact of the coronavirus, and in fading optimism that Opec+ will come through with deeper production cuts in March,” said Edward Moya, senior market analyst at Oanda.
“Optimism that China would see a return to normalcy in travel and trade next quarter was probably wrong. The rest of world is exercising caution on virus spreading fears and that will do no favours for crude’s demand outlook,” Moya said.
US stock futures slipped from record levels on Tuesday after Apple, the most valuable company in the USs, said it will not meet its revenue guidance for the March quarter as the coronavirus outbreak slowed production and weakened demand in China.
The number of new coronavirus infections in mainland China fell below 2,000 on Tuesday for the first time since January, Chinese health officials said, though global experts warn it is too early to say the outbreak is being contained.
The International Energy Agency (IEA) said the virus was set to cause oil demand to fall by 435,000 barrels a day (year-on-year in the first quarter, in what would be the first quarterly drop since the financial crisis in 2009.
Still, with some Chinese independent refineries snapping up crude supplies after being absent from the market for weeks, traders held out hopes that China's demand could recover in coming months.
Investors are also anticipating that the Organisation of the Petroleum Exporting Countries (Opec) and its allies, including Russia, will approve a proposal to deepen production cuts to tighten global supplies and support prices.
The group, known as Opec+, has an agreement to cut oil output by 1.7-million barrels a day until the end of March.
Oil output from Libya has fallen sharply since January 18 because of a blockade of ports and oilfields by groups loyal to eastern-based commander Khalifa Haftar.
Libya’s National Oil Corporation (NOC) said on Monday that oil production was at 135,745 barrels a day as of Monday, compared with 1.2-million before the stoppage.
Reuters
Oil price hold steady as supply cut expectations offset demand fears
Oil dips ahead of data on effect of coronavirus on Asia demand
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