Oil futures fell on Thursday, with prices poised to log their lowest settlement since October, as worries rise over the potential economic impact from the continued spread of the coronavirus.
“Alarm bells are going off in global markets after the World Health Organization (WHO) is saying they deeply regret calling the outbreak of the coronavirus moderate,” said Phil Flynn, senior market analyst at The Price Futures Group, in a note. That’s “raising fears that the virus is much worse than official Chinese channels are telling us. If that fear permeates the public in other parts of the world, it could be a real risk to global economic growth.”
West Texas Intermediate crude for March delivery CLH20, -2.81% on the New York Mercantile Exchange fell $1.19, or 2.2%, to $52.14 a barrel, after trading as low as $51.92 — the lowest intraday level for a most active contract since Oct. 10, according to FactSet. March Brent crude BRNH20, -2.89%, which expires at Friday’s settlement, shed $1.02, or 1.7%, to $58.59 a barrel, poised for the lowest front-month contract finish since Oct. 9.
Read: Oil on brink of bear market as coronavirus fuels ‘demand destruction’ fears
Chinese authorities on Thursday said more than 7,700 people have been infected, with at least 170 dead. World Health Organization officials expressed “great concern” over the virus’s spread outside of China. The World Health Organization was expected to meet Thursday to weigh if the outbreak should be declared a global emergency, news reports said.
“Concerns about today’s WHO meeting and the possibility the coronavirus will be declared a global emergency and the effects that could have on the Chinese and global economies, has the market in risk off mode today,” said Robert Yawger, director of energy at Mizuho Securities U.S.A., in a note.
“A number of international flights to China have been canceled and if this trend continues in the coming days and weeks it will likely only deepen demand concerns,” said Warren Patterson, head of commodities strategy at ING, in a note.
In recent days there have been suggestions that the Organization of the Petroleum Exporting Countries and their allies may be considering extending or increasing their current production cut agreement due to concerns about the virus’ impact on oil demand.
Saudi Arabia has opened talks about moving the OPEC+ meeting to early February from March, Reuters reported Thursday, citing four OPEC+ sources.
On Wednesday, WTI, the U.S. benchmark, ended lower, giving up earlier gains after government data showed a larger-than-expected climb in weekly crude inventories.
In other energy trading, February gasoline RBG20, -2.71% fell 2.7% to $1.4903 a gallon, while February heating oil HOG20, -3.75% was off 2.2% at $1.6656 a gallon. The February contract expire at the end of Friday’s session.
March natural gas NGH20, -2.47% was down 2.6 cents, or 1.4% at $1.839 per million British thermal units.
On Thursday, the U.S. Energy Information Administration reported that domestic supplies of natural gas fell by 201 billion cubic feet for the week ended Jan. 24. That compared with a decline of 207 billion cubic feet forecast by analysts polled by S&P Global Platts. The market saw a withdrawal of 171 billion cubic feet in the same week last year and a five-year average draw for the period of 143 billion cubic feet, according to S&P Global Platts.
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Oil falls to more-than-3-month low as coronavirus fears rise - MarketWatch
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