Oil prices fell for the fifth session yesterday, Thursday, its lowest level in more than a year, at a time when increased cases of the emerging Coronavirus (Covid-19) outside China fueled fears that the epidemic might slow the global economy and reduce demand for crude.
Brent crude fell $ 1.25, or 2.3 percent, at the settlement to $ 52.18 a barrel, which is more than the lowest level during the session of $ 50.97, the lowest level since December 2018.
U.S. West Texas Intermediate crude futures fell $ 1.64, or 3.4 percent, to $ 47.09, after hitting its lowest levels since January 2019.
For the first time since the outbreak, the number of new cases of coronavirus outside of China exceeded the new cases within it.
Trading in oil markets indicates that investors expect an extended period of surplus supplies, with demand affected by the spread of the virus to large economies such as South Korea, Japan and Italy.
“Oil is in free fall, as the massive efforts of quarantine globally will severely destroy demand in the next two quarters,” said Edward Moya, market analyst at Onda in New York.
The crude market is awaiting a possible increase in production cuts by the Organization of Petroleum Exporting Countries (OPEC) and its allies, including Russia, in what is known as the OPEC + group, which is scheduled to meet in Vienna on the fifth and sixth of March.
The group is currently reducing supplies by about 1.2 million barrels per day to support prices.
Factors Global Energy Consulting expects oil demand to grow by only 60,000 bpd in 2020, a level it has described as “virtually zero” due to the outbreak.
Kristalina Georgieva, director of the International Monetary Fund, said the outbreak will likely reduce the growth of China’s economy this year to 5.6 percent, down 0.4 percentage points from its forecast in January, and will deduct 0.1 percentage points from global growth.
And two informed sources said that Saudi Arabia, the largest oil exporter in the world, will reduce crude supplies to China in March by no less than 500 thousand barrels per day due to the slowdown in refineries demand after the outbreak of the Corona virus.
