Oil prices fell 2% on Thursday, plunging for fifth day to their lowest since January 2019 as a rise in new coronavirus cases outside China fuelled fears of a pandemic that could slow the global economy and dent demand for crude, report agencies. Brent crude LCOc1 was down $1.06, or 2%, at $52.37 a barrel at 1011 GMT. West Texas Intermediate (WTI) futures CLc1 fell by 97 cents, or 2%, to $47.76 a barrel.
For the first time since the start of the coronavirus outbreak erupted in China, the number of new coronavirus infections outside China exceeded new Chinese cases.
The spread of the virus to large economies including South Korea, Japan and Italy has raised concerns that growth in fuel demand will be limited. Consultants Facts Global Energy forecast oil demand would grow by 60,000 barrels per day in 2020, a level it called “practically zero”, due to the outbreak.
U.S. President Donald Trump sought to assure Americans on Wednesday evening that the risk from coronavirus remained “very low”, but Asian share markets fell on Thursday morning. “The negative price impact would intensify if the coronavirus were declared pandemic by the World Health Organization, something that looks imminent,” said PVM Oil Associates analyst Tamas Varga.
“The mood is gloomy and the end of the tunnel is not in sight – there is no light ahead just darkness. Not even a refreshingly positive weekly U.S. oil report was able to lend price support.” Gasoline stockpiles dropped by 2.7 million barrels in the week to Feb. 21 to 256.4 million, the Energy Information Administration (EIA) said on Wednesday, amid a decline in refinery throughput.
Distillate inventories fell by 2.1 million barrels to 138.5 million. U.S. crude oil stockpiles increased by 452,000 barrels to 443.3 million barrels, the EIA said, which was less than the 2-million-barrel rise analysts had expected. The crude market is watching for possible deeper output cuts by the Organization of the Petroleum Exporting Countries and its allies including Russia, a group known as OPEC+.
“The falls this week, primarily through $55.00 on Brent crude, are likely to awaken the OPEC+ grouping from their slumber finally,” said Jeffrey Halley, senior analyst at OANDA. OPEC+ plans to meet in Vienna on March 5-6.
