Oil jumps as WHO declares emergency but recommends no travel, trade restrictions

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Reuters
KEY POINTS
  • Brent crude futures jumped $1.16 to $59.45 a barrel by 0532 GMT, after falling 2.5% the previous session. Brent is still down 2% for the week.
  • U.S. West Texas Intermediate (WTI) futures were up by $1.06 to $53.20 a barrel. The contract fell 2.2% on Thursday and is now 1.8% lower for the week.
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Oil prices jumped on Friday following sharp losses this week, as the World Health Organization (WHO) came out against travel and trade restrictions in declaring a global emergency over the spread of a coronavirus that originated in China last year.

Oil prices fell nearly 4% through Thursday this week — hitting three-months lows — before rebounding on Friday, with investors and traders worried over how spread of the virus would impact demand for oil and its products.

“WHO’s decision … to oppose restricting travel and trades against China boosted market confidence, even though the organization declared a global health emergency,” said Margaret Yang, market analyst at CMC Markets.

Brent crude futures jumped $1.16 to $59.45 a barrel by 0532 GMT, after falling 2.5% the previous session. Brent is still down 2% for the week.

U.S. West Texas Intermediate (WTI) futures were up by $1.06 to $53.20 a barrel. The contract fell 2.2% on Thursday and is now 1.8% lower for the week.

The WHO on Thursday declared that the coronavirus outbreak in China — which has killed more than 200 people there and has spread to some 18 countries — now constitutes a public health emergency of international concern.

Despite the rebound in prices on Friday, analysts remained cautious and warned of further downside risks if the virus continues to spread.

“Oil’s January correction, a 13% drop to be exact, was ripe for a bounce,” said Edward Moya, senior market analyst at OANDA in New York.

“Oil is likely to remain vulnerable despite today’s optimism that the coronavirus has likely been contained,” he said.

Italy’s government decided to halt all air traffic between Italy and China, and airlines including Air France, American Airlines and British Airways have stopped flying to Chinese cities.

“An escalation in alert levels around the world will likely curb demand travel and thus energy,” said CMC’s Yang.

Driven largely by a drop in Chinese domestic and international transport activity, world oil demand was adjusted lower by 500,000 barrels per day in the first quarter of 2020, according to estimates from Wood Mackenzie consultant Yujiao Lei.

Prices were also buoyed by reports that Saudi Arabia has opened a discussion about moving an upcoming output policy meeting to early February from March following the recent slide in oil prices.

Oil falls as virus death toll in China climbs

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KEY POINTS
  • Brent was down 62 cents, or 1%, at $59.19 a barrel by 0623 GMT, having risen 0.5% on Wednesday
  • U.S. crude was down 51 cents, or 1%, at $52.82 a barrel, after dropping 0.3% in the previous session.
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Oil prices fell on Thursday, resuming their declines after a brief pause earlier this week, as alarm spread over the economic impact of the Wuhan virus in China, while a bigger-than-expected increase in U.S. crude stocks added to the negative tone.

Brent was down 62 cents, or 1%, at $59.19 a barrel by 0623 GMT, having risen 0.5% on Wednesday. U.S. crude was down 51 cents, or 1%, at $52.82 a barrel, after dropping 0.3% in the previous session.

Prices had steadied in recent days, after a rout pushed them to three-month lows as investors tried to assess damage from the virus to economic growth and demand for crude and its products.

But now the rising death toll from the virus and its dispersion around the world has again turned screens red, with Asian stock markets down sharply.

“The Wuhan virus outbreak and its economic fall-out on Asia, the engine room of the world, remains the most crucial issue facing oil markets, with any rally likely to have short half-lives,” said Jeffrey Halley, senior market analyst at OANDA.

Three Japan citizens evacuated from Wuhan, China, and repatriated on Wednesday have been confirmed to be infected with the coronavirus, including two without symptoms, the health ministry said on Thursday. Two people refused to be tested and Japan has 11 confirmed cases.

A second flight of Japanese evacuees from Wuhan, where the outbreak started at the end of last year, landed in Japan on Thursday, with nine showing symptoms of fever or coughing, broadcaster NHK reported.

Infections in China have passed 7,700 and several countries started isolating citizens evacuated from Wuhan to help efforts to prevent the global spread of the epidemic. In China, the death toll has climbed to 170 people.

The World Health Organisation’s Emergency Committee is set for another meeting later on Thursday to reconsider whether the rapid spread of the virus should now be called a global emergency.

Airlines around the world are suspending or reducing direct flights to China as travel warnings are issued by governments and passenger numbers drop.

Bigger-than-expected gains in U.S. crude oil inventories last week also kept pressure on prices.

Crude stocks rose by more than seven times market expectations, gaining 3.5 million barrels in the week to Jan. 24, the U.S. Energy Information Administration (EIA) said on Wednesday.

Gasoline stocks rose to a record high, increasing for a 12th consecutive week to 261.1 million barrels, the EIA said.

Oil rises as investors take stock of economic hit from virus

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KEY POINTS
  • Brent crude rose 33 cents, or 0.6%, to $59.84 a barrel by 0103 GMT.
  • U.S. crude was up 31 cents, or 0.6%, at $53.79 a barrel.
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Oil prices rose for a second day on Wednesday, standing on firmer ground after a five-day fall on talk OPEC could extend oil cuts if a new coronavirus hurts demand, while data showing a decline in U.S. stockpiles helped steady prices.

Brent crude rose 33 cents, or 0.6%, to $59.84 a barrel by 0103 GMT, while U.S. crude was up 31 cents, or 0.6%, at $53.79 a barrel.

Financial markets that have been hit by the spread of the virus and a growing death toll are taking stock of the economic fallout, helped by comments from the head of the World Health Organization supporting China’s efforts to beat the outbreak.

“Oil’s bloodbath appears to be over for now,” said Edward Moya, senior market analyst at OANDA.

“China’s coronavirus fears have somewhat eased and a 4.3 million barrel drop with the American Petroleum Institute data provided a boost for energy prices,” he added.

OPEC wants to extend oil production cuts until at least June from March, and may deepen the reductions should demand for oil in China be significantly reduced by the spread of the virus, OPEC sources said.

U.S. oil inventories fell last week, data from industry group the American Petroleum Institute showed on Tuesday, compared with analysts’ expectations of a gain of 482,000 barrels.

Oil falls for sixth day as China virus raises global growth, demand concerns

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Reuters
KEY POINTS
  • Brent crude was down 37 cents, or 0.6%, to $58.95 at around 0348 GMT, after touching a three-month low on Monday at $58.50, as the virus outbreak triggered a global sell-off in riskier assets.
  • U.S. West Texas Intermediate was down 29 cents, or 0.6%, at $52.85, after slipping to its lowest since early October in the previous session at $52.13.
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Rusted out “pump-jacks” in the oil town of Luling, Texas.
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Oil futures fell for a sixth session on Tuesday as the spread of a new virus in China and several countries raised concerns about a hit to economic growth and oil demand.

Brent crude was down 37 cents, or 0.6%, to $58.95 at around 0348 GMT, after touching a three-month low on Monday at $58.50, as the virus outbreak triggered a global sell-off in riskier assets.

U.S. West Texas Intermediate was down 29 cents, or 0.6%, at $52.85, after slipping to its lowest since early October in the previous session at $52.13.

The United States warned against travel to China and other countries put out advisories as the death toll from the spreading coronavirus outbreak rose to more than 100 people and left millions of Chinese stranded during the biggest holiday of the year.

Oil investors are concerned travel advisories, other restrictions and any sizable impact on growth in the world’s second-biggest economy and elsewhere will dampen demand for crude and its products, amid plentiful supply.

“The near-term potential of a nationwide travel shutdown is high,” said Ian Bremmer, president of Eurasia Group, a political and market risk consultancy.

Barclays said oil prices could be $2 below its forecasts of Brent to be $62 a barrel over 2020 and $57 a barrel for WTI.

The bank expects the grouping known as OPEC+ to take further steps to support the market when it meets in March if demand lags its forecast of between 600,000 and 800,000 barrels per day (bpd) in the first quarter of 2020.

“While it remains to be seen how quickly the spread of the virus is contained, experience from the 2003 SARS outbreak suggests demand worries are likely overdone,” the bank said.

The Organization of the Petroleum Exporting Countries (OPEC), has been trying to play down the fallout from the virus, while Saudi Arabia, its de-facto leader, said on Monday the group could respond to any changes in demand.

OPEC and producers including Russia, known as OPEC+, have been cutting supply to support oil prices for nearly three years and recently agreed to withhold a further 500,000 barrels bpd to 1.7 million bpd through March.

Underlining the supply concerns, a Reuters poll forecast U.S. crude stockpiles to have risen last week.

Oil prices skid 2%, extending slide as China virus spreads

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Reuters
KEY POINTS
  • Brent crude fell by $1.12 a barrel, or 1.9%, to $59.57 by 0113 GMT, having earlier dropped to $58.68, the lowest since late October.
  • U.S. crude slipped by $1.14, or 2.1%, to $53.05, having earlier eased to $52.15, the lowest since early October.
RT: Pemex refinery 191005
A general view shows Mexican state oil firm Pemex’s Cadereyta refinery, in Cadereyta, Mexico October 5, 2019.
Daniel Becerril | Reuters

Oil prices slumped a further 2% to multi-month lows on Monday as the rising number of cases of the new China virus and city lockdowns deepened concerns about demand for crude, even as Saudi Arabia’s energy minister sought to calm the market.

Brent crude fell by $1.12 a barrel, or 1.9%, to $59.57 by 0113 GMT, having earlier dropped to $58.68, the lowest since late October. U.S. crude slipped by $1.14, or 2.1%, to $53.05, having earlier eased to $52.15, the lowest since early October.

Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman Al-Saud said on Monday he was watching developments closely in China and said he felt confident that the new virus would be contained.

Markets are being “primarily driven by psychological factors and extremely negative expectations adopted by some market participants despite its very limited impact on global oil demand,” he said.

With the coronavirus’s ability to spread getting stronger most financial markets are being hit, although many are closed in Asia due to the Lunar New Year holidays.