Oil prices fall again, on track for biggest weekly drop in over 4 years

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Reuters
KEY POINTS
  • West Texas Intermediate (WTI) crude futures fell 73 cents, or 1.6%, to $56.36 per barrel. U.S. crude has fallen about 13% for the week, the biggest weekly decline since November 2014.
GP: Offshore oil rig
An offshore oil platform.
Cavan Images | Cavan | Getty Images

Oil prices fell for a sixth straight session on Friday and were on track for about a 12% weekly fall, the biggest in more than four years, as the spread of the coronavirus outside China raised fears of slowing global demand.

The virus, which has killed more than 2,700 people in China, has been found in another 46 countries and caused 57 deaths. Investors worry the epidemic could turn into a pandemic and deliver a damaging blow to the global economy.

The most active Brent crude contract for May was down 90 cents, or 1.7%, at $50.83 a barrel by 0141 GMT, a 14-month low. The front-month April contract expires today.

The international benchmark, which fell about 2% on Thursday, has shed around 12% this week and is on track for its steepest weekly decline since mid-January 2016.

West Texas Intermediate (WTI) crude futures fell 73 cents, or 1.6%, to $56.36 per barrel. U.S. crude has fallen about 13% for the week, the biggest weekly decline since November 2014.

With new infections reported around the world now surpassing those in mainland China, the World Health Organization said on Thursday that all countries need to prepare to combat the coronavirus.

“Oil prices are moving tangentially to news flows around the deluge of secondary cluster outbreaks,” said Stephen Innes, chief market strategist at AxiCorp.

“And for the oil market, none more so worrying than those reports emanating from the U.S. market, which is the biggest consumer of oil on the planet by a long shot.”

U.S. health officials urged Americans to begin preparing for the spread of coronavirus in the United States earlier this week.

The oil market is hoping for steeper supply cuts by the Organization of the Petroleum Exporting Countries (OPEC) and its allies including Russia, who have said they will take a responsible approach in the wake of the virus outbreak.

The producer group known as OPEC+, which is currently reducing output by roughly 1.2 million barrels per day to support prices, is set to meet in Vienna on March 5-6.

“We now believe the group needs to make much steeper cuts than the 600,000 barrels per day (bpd) recommendation from their technical committee to support prices,” Jefferies analyst Jason Gammel said.

“At least a 1 million bpd cut for the second quarter strikes us as necessary to merely moderate inventory builds, and we confess to underestimating demand destruction over the last several weeks.”

Oil falls for fifth day on demand concerns as coronavirus spreads

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Reuters
KEY POINTS
  • Brent crude was down 63 cents, or 1.2%, at $52.80 a barrel at 0414 GMT. The contract earlier fell to as low as $52.57, the lowest since Jan. 2, 2019.
  • West Texas Intermediate (WTI) futures fell by 65 cents, or 1.3%, to $48.08 a barrel. It earlier fell to as low as $47.84, the lowest since Jan. 4, 2019.
GP: Oil production facilities 200205 ASIA
A kayaker passes in front of an offshore oil platform in the Guanabara Bay in Niteroi, Brazil, Saturday, Feb. 1, 2020.
Dado Galdieri | Bloomberg | Getty Images

Oil prices fell for a fifth day on Thursday to their lowest since January 2019 as a growing number of new coronavirus cases outside of China fuelled fears of a pandemic which could slow the global economy and lower crude demand.

Brent crude was down 63 cents, or 1.2%, at $52.80 a barrel at 0414 GMT. The contract earlier fell to as low as $52.57, the lowest since Jan. 2, 2019.

West Texas Intermediate (WTI) futures fell by 65 cents, or 1.3%, to $48.08 a barrel. It earlier fell to as low as $47.84, the lowest since Jan. 4, 2019.

In the five trading sessions through Thursday, Brent has dropped 11%, while WTI has declined 10.6%, their biggest five-day percentage losses since August 2019.

On Wednesday, for the first time ever, the number of new coronavirus infections outside China, the source of the outbreak, exceeded the number of new Chinese cases.

The spread to large economies including South Korea, Japan and Italy has caused concerns that fuel demand growth will be limited. On Wednesday, consultants Facts Global Energy forecast oil demand growth will only 60,000 barrels per day in 2020, or “practically zero”, because of the widening outbreak.

U.S. President Donald Trump assured Americans on Wednesday evening that the risk from coronavirus remained “very low”. However, Asian share markets fell on Thursday morning, as investors fear the coronavirus spread will disrupt the global economy as quarantines and other measures taken to halt its advance slow trade and industry.

“Speculations that coronavirus may spread in the United States prompted a series of fresh selling,” said Kazuhiko Saito, chief analyst at Fujitomi Co.

If an outbreak “continues to worsen in the United States, oil prices will likely decline further, especially with U.S. gasoline prices already plunging,” Saito said.

The United States is the world’s largest oil producer and consumer.

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 Energy Information Administration said, which was less than the 2-million-barrel rise analysts had expected.

The crude market was also watching for possible deeper output cuts by the Organization of the Petroleum Exporting Countries (OPEC) and its allies including Russia, a group known as OPEC+.

OPEC+ plans to meet in Vienna over March 5-6.

Oil rises on short-covering despite growing fears over coronavirus

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Reuters
KEY POINTS
  • Brent crude rose 42 cents, or 0.8%, to $55.37 a barrel by 0154 GMT.
  • U.S. West Texas Intermediate crude gained 43 cents, or 0.9%, to $50.33 a barrel.
  • Still, both benchmarks are down nearly 7% since last Thursday’s close.
GP: Oil production as sun sets
Oil production in Azerbaijan
Vostok

Crude prices edged up on Wednesday as investors covered short positions after three sessions of losses, even as fears deepened that the rapid spread of the coronavirus will lead to a global pandemic.

Brent crude rose 42 cents, or 0.8%, to $55.37 a barrel by 0154 GMT, while U.S. West Texas Intermediate crude gained 43 cents, or 0.9%, to $50.33 a barrel. Still, both benchmarks are down nearly 7% since last Thursday’s close.

Fears of a pandemic escalated after the coronavirus spread to more countries, while Iran’s virus death toll rose to 16, the highest outside China, and infections worsened in South Korea and Italy.

In the United States, the Centers for Disease Control and Prevention said Americans should prepare for possible community spread of the virus.

“Investors unwound short positions after WTI dipped below a key support level of $50, as they have done a few times earlier this month,” said Hideshi Matsunaga, analyst at Sunward Trading.

“The reduction in Libya’s output and expectations for additional production cuts by the Organization of the Petroleum Exporting Countries (OPEC) and OPEC+ are also lending support,” he said.

Oil output in Libya has fallen sharply since Jan. 18 because of a blockade of ports and oil fields by groups loyal to eastern-based commander Khalifa Haftar.

OPEC and its allies including Russia, a group known as OPEC+, are due to meet in Vienna over March 5-6.

Saudi Arabia’s energy minister said on Tuesday he was confident that OPEC and its partners would respond responsibly to the spread of the coronavirus.

Still, lingering worries that the rapidly spreading coronavirus will dent the global economy and oil demand are weighing on investor sentiment.

The International Energy Agency’s (IEA) outlook on global oil demand growth has fallen to its lowest level in a decade, IEA Executive Director Fatih Birol said on Tuesday, adding it could be reduced further due to the coronavirus outbreak.

U.S. crude inventories are expected to rise for a fifth week running. The American Petroleum Institute (API) said late Tuesday that crude stockpiles rose 1.3 million barrels last week. Government data due at 10:30 a.m. EST (1530 GMT) on Wednesday was expected to show a 2 million-barrel rise, according to a Reuters poll.

Meanwhile, the United States is preparing to impose more sanctions on Venezuela’s oil sector, President Donald Trump said on Tuesday, in an attempt to choke financing to President Nicolas Maduro’s government.

Oil steadies on bargain-hunting; virus fears cap gains

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Reuters
KEY POINTS
  • Brent crude rose 19 cents, or 0.3%, to $56.49 a barrel by 0436 GMT, after slipping 3.8% on Monday, the largest single-day price fall since Feb. 3.
  • U.S. crude futures gained 17 cents, or 0.3%, to $51.60, recovering from a 3.7% drop in the previous session.
GP: Oil production facilities 200205 ASIA
A kayaker passes in front of an offshore oil platform in the Guanabara Bay in Niteroi, Brazil, Saturday, Feb. 1, 2020.
Dado Galdieri | Bloomberg | Getty Images

Oil steadied on Tuesday as investors sought bargains after crude benchmarks slumped almost 4% in the previous session, although concerns about the coronavirus spreading out of China denting major economies and curbing fuel demand capped gains.

Brent crude rose 19 cents, or 0.3%, to $56.49 a barrel by 0436 GMT, after slipping 3.8% on Monday, the largest single-day price fall since Feb. 3.

U.S. crude futures gained 17 cents, or 0.3%, to $51.60, recovering from a 3.7% drop in the previous session.

“Because we’ve seen a very significant fall in case of West Texas, from above $60 to touch below $50 (over the past six weeks), I think oil has largely reflected a lot of risk, unlike other markets,” Michael McCarthy, chief market strategist at CMC Markets, told Reuters over the phone.

Crude markets are also close to an important technical support level between $49.50 and $50 for WTI and between $54.50 and $55 for Brent, McCarthy said.

“For this week, key factors are coronavirus, inventory data and the technical picture,” he said.

Demand concerns savaged prices for oil and a whole swathe of commodities on Monday, while both U.S. and European equities suffered their steepest losses since mid-2016.

Asian share markets were trying to stabilize on Tuesday after a wave of early selling petered out and Wall Street futures managed a solid bounce.

In the United States, crude oil inventories were seen building for a fifth straight week, while refined products likely fell, a preliminary Reuters poll on the expectations for the week ended on Feb. 21 showed on Monday.

Countries around the world are stepping up efforts to prevent a pandemic of the flu-like SARS-CoV-2 virus originating from China late last year that has now infected more than 80,000 people, 10 times more than the SARS coronavirus of 2002/2003.

“Fears that the rapidly-spreading coronavirus outside of China could lead to a bigger-than-anticipated impact on global economy and oil demand will likely keep weighing on market sentiment,” Satoru Yoshida, a commodity analyst with Rakuten Securities said.

Saudi Aramco expects the coronavirus impact on oil demand to be short-lived, however, and for consumption to rise in the second half of the year, Chief Executive Amin Nasser told Reuters on Monday.

Oil prices skid on demand concerns as virus spreads globally

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Reuters
KEY POINTS
  • Brent crude fell by $1.69 or 2.9% to $56.81 a barrel by 0158 GMT.
  • U.S. crude futures fell by $1.40 or 2.6% to $51.98.
GP: Oil production facilities 200205 ASIA
A kayaker passes in front of an offshore oil platform in the Guanabara Bay in Niteroi, Brazil, Saturday, Feb. 1, 2020.
Dado Galdieri | Bloomberg | Getty Images

Oil prices tumbled nearly 3% towards a one-week low on Monday as the rapid spread of the coronavirus in several countries outside China left investors fretting about a hit to demand.

Global shares also extended losses as concerns about the impact of the new virus grew, with the number of infections jumping in South Korea, Italy and Iran.

Brent crude fell by $1.69 or 2.9% to $56.81 a barrel by 0158 GMT. U.S. crude futures fell by $1.40 or 2.6% to $51.98.

“It’s pretty clear in the middle of last week that the consensus overall was that it would be a temporary economic impact and that would be at least offset by the actions of central banks,” said Michael McCarthy, chief market strategist at CMC Markets in Sydney.

“But as we’ve seen European and U.S. markets react on Friday night and then further news over the weekend about the global spread of the virus, investors now are questioning the assumption about economic growth and that of course is weighing on oil markets.”

South Korea’s government put the country on high alert after the number of infections surged to over 700 with seven deaths, while in Italy, officials said a third person infected with the flu-like virus had died, as the number of cases jumped to above 150 from just three before Friday.

Iran said it had confirmed 43 cases and eight deaths, with most of the infections in the Shi’ite Muslim holy city of Qom. Saudi Arabia, Kuwait, Iraq, Turkey and Afghanistan imposed travel and immigration restrictions on the Islamic Republic.

“We should not underestimate the economic disruption as a super spreader could trigger a massive drop in business activity around the globe of proportions the world has never dealt with before,” said Stephen Innes, chief market strategist at AxiCorp in a note on Monday.

Oil prices received some support after local health commissions in China said on Monday that four Chinese provinces — Yunnan, Guangdong, Shanxi and Guizhou — have lowered their coronavirus emergency response measures.

Chinese President Xi Jinping said on Sunday the world’s largest energy consumer will adjust policy to help cushion the blow to the economy from the coronavirus outbreak.

In the United States, the oil rig count, an indicator of future production, rose for a third straight week. Drillers added one oil rig last week, bringing the total count to 679, the highest since the week of Dec. 20, energy services firm Baker Hughes Co said.