NEW YORK: Crude prices fell more than two percent on Friday, heading toward $60 a barrel and a steep weekly decline over concerns that the coronavirus in the world’s second-largest oil consumer China will spread farther, curbing travel and oil demand.
The virus has prompted the suspension of public transport in 10 Chinese cities, while cases of infection have been found in several other Asian countries and the United States. Brent crude was down $1.42, or 2.3 percent, at $60.62 by 11:49 a.m. EST (1649 GMT). The global benchmark was down 6.5% so far this week, in its third weekly decline.
US crude dropped $1.39, or 2.5 percent, to $54.20 and was on course for a 7.5 percent weekly decline. “The market is concerned that the spread of the coronavirus is going to impact on oil demand especially in Asia, which has been the growth market,” Andy Lipow, president of Lipow Oil Associates in Houston. Health authorities fear the infection rate could accelerate over the Lunar New Year holiday this weekend, when millions of Chinese travel. Limiting losses in oil prices is the US government’s latest supply report, which on Thursday showed crude inventories fell 405,000 barrels last week. Still, US gasoline stockpiles grew for an 11th consecutive week to a record high.
Oil inventories in the wider industrialised world are above the five-year average, according to OPEC figures, which analysts say is limiting the impact of supply losses. “Such is the bearish pressure that a raft of ongoing crude supply outages are not gaining much traction,” said analysts at JBC Energy in a report. Such outages include the shutdown this week of the bulk of oil supply in OPEC producer Libya.
The prospect of further steps by the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, could still offer support. OPEC+ has been mostly limiting supply since 2017 and on Jan. 1 deepened a cut in output.
Saudi Arabia’s energy minister said all options are open at the next OPEC+ meeting in March, including further cuts, Al Arabiya television reported on Thursday. The current OPEC+ deal expires at the end of March. Russia’s No. 2 oil producer Lukoil expects it to be extended, Interfax news agency cited its chief executive as saying on Thursday.