Oil falls as coronavirus spread beyond China heightens demand fears

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Reuters
KEY POINTS
  • Brent crude was down 28 cents, or 0.5%, at $59.03 a barrel by 0332 GMT.
  • U.S. crude was also off by 28 cents, or 0.5%, at $53.60 a barrel.
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Oil production in Azerbaijan
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Oil prices fell on Friday amid concerns over fuel demand as the coronavirus epidemic spread further beyond China, while major crude producers stood pat on any early action to cut output to support the market.

Brent crude was down 28 cents, or 0.5%, at $59.03 a barrel by 0332 GMT, while U.S. crude was also off by 28 cents, or 0.5%, at $53.60 a barrel.

On Friday South Korean authorities confirmed 52 new coronavirus infections, Yonhap reported. The streets of Daegu, the country’s fourth-largest city, were deserted on Thursday after dozens of people there went down with the pathogen in what authorities described as a “super-spreading” event.

In China itself, the world’s biggest importer of crude oil, new cases also rose on Friday from the day before even as Beijing presses on with efforts to contain the spread that has largely paralyzed the world’s second-biggest economy.

“I think there is a lot of reason for caution right now, as the impact of coronavirus on demand is still unclear,” Stratfor oil analyst Greg Priddy said by email.

“If it begins to look like the impact will be modest, that could affect Russia’s decision at the March 5-6 OPEC+ meeting on whether they are willing to endorse a further cut,” he added.

Russian Energy Minister Alexander Novak said on Thursday that global oil producers understood that it would no longer make sense for the Organization of the Petroleum Exporting Countries (OPEC) and its allies to meet before their gathering.

The grouping, known as OPEC+, has been withholding supply from the market to support prices for several years now and many analysts expect an extension or deepening of the restrictions on production.

Moscow has said it will disclose its stance in the coming days.

Adding to pressure on oil prices was the strength of the U.S. dollar as investors looked for safe havens. A stronger greenback typically makes oil more expensive as the commodity is usually priced in dollars.

Meanwhile prices were little changed by tensions in the Middle East after Saudi Arabia said on early Friday it had intercepted and destroyed several ballistic missiles launched by Houthi militia towards Saudi cities.

In the United States, crude stockpiles rose for a fourth week last week, although less than analysts had forecast. Gasoline and distillate inventories continued recent declines.

Oil falls as virus death toll in China climbs

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Reuters
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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Reuters
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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Andrew Burton | Getty Images

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 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.

Oil gains after US-China trade deal and a rise in crude inventories

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Reuters
KEY POINTS
  • Oil prices rose on Thursday after the signing of an initial trade deal that sets the stage for a surge in Chinese purchases of American energy products, while U.S. crude inventories fell more than expected.
  • Brent was 45 cents, or 0.7%, higher at $64.45 a barrel by 0310 GMT.
  • U.S. crude was up by 39 cents, or 0.7%, at $58.20 a barrel.
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A drilling crew secures a stand of drill pipe into the mouse hole on a drilling rig near Midland, Texas February 12, 2019.
Nick Oxford | Reuters

Oil prices rose on Thursday after the signing of an initial Sino-U.S. trade deal that sets the stage for a surge in Chinese purchases of American energy products, while U.S. crude inventories fell more than expected.

Brent was 45 cents, or 0.7%, higher at $64.45 a barrel by 0310 GMT, while U.S. crude was up by 39 cents, or 0.7%, at $58.20 a barrel.

Under the so-called Phase 1 deal to call a truce in a trade war between the world’s two biggest economies, China committed to buying over $50 billion more of U.S. oil, liquefied natural gas and other energy products over two years.

“It was a formal signing of something which had already been agreed, but that has certainly boosted sentiment,” said Virendra Chauhan, oil analyst at Energy Aspects.

Trade sources and analysts said China could struggle to meet the target and gains in oil are likely to be limited ahead of more detail on how the commitments will be achieved.

Official U.S. data showing a much bigger than expected drop in crude oil inventories, also helped underpin prices, Chauhan said.

“They were slightly constructive. We saw a counter-seasonal draw in U.S.crude stocks and that generally is supportive,” he said.

Oil inventories fell by 2.5 million barrels, compared with analyst expectations of a drop of 500,000 barrels, according to data from the Energy Information Administration (EIA), an agency of the U.S. Department of Energy.

Nonetheless, gasoline stocks rose by 6.7 million barrels and distillate stocks were up by 8.2 million barrels, according to the EIA.

U.S. crude production also rose to a record 13 million barrels per day, the agency said.

Oil prices are returning to range trading, analysts said, as the threat of conflict between Iran and the U.S. receded further after they traded missile and drone attacks earlier this month.

That sent Brent to highs above $71 a barrel, before prices touched more than one-month lows in advance of the signing of the U.S.-China deal.