Oil slumps to 13-month low on fears of economic toll from coronavirus - MarketWatch

Oil prices fell Wednesday, sending the U.S. benchmark to a 13-month low, as the spread of COVID-19 outside China fed worries over demand for crude.

West Texas Intermediate crude for April delivery CLJ20, -0.70%  fell 72 cents, or 1.4%, to $48.18 a barrel on the New York Mercantile Exchange, after trading at its lowest intraday level since January 2019. May Brent crude BRNK20, -1.05%  dropped $1.01, or 1.9%, to $53.25 a barrel on ICE Europe.

Worries about the spread of COVID-19 outside of China continue to drive trade across financial markets, with assets perceived as risky, including equities and commodities, under pressure as investors pile into haven assets. The number of confirmed cases and deaths outside China has continued to rise, particularly in Italy, Iran, Japan and South Korea. Stocks extended losses Tuesday after the Centers for Disease Control and Prevention said Americans should prepare for the spread of the coronavirus in the U.S.

See: COVID-19 case tally: 81,191 cases, 2,768 deaths

“Oil’s sensitivity to coronavirus-linked concerns has made for a tumultuous 2020 so far. [Brent] could see another sharp drop towards $50 a barrel, especially if the CDC’s warning of contagion in the U.S. occurs,” said Lukman Otunuga, senior research analyst at FXTM.

Meanwhile, uncertainty remains over prospects for a further cut in production by the Organization of the Petroleum Exporting Countries and its allies, particularly Russia. Officials are due to meet next week. Russia has signaled reluctance to go along with a Saudi push for a deeper cut. But analysts questioned whether a move would have a big effect on prices, at least in the near term.

“OPEC+ may decide to trigger more supply cuts at next week’s meeting, but this may only have a limited effect on oil prices, as demand-side concerns are expected to continue having a major sway on the commodities complex,” Otunuga said.

Meanwhile, the American Petroleum Institute late Tuesday reported that U.S. crude inventories rose by 1.3 million barrels in the week ended Feb. 21, according to sources. The data also showed a 74,000 barrel rise in gasoline stockpiles and a 706,000 barrel fall in distillate inventories, they said.

Investors will be watching more closely followed data from the Energy Information Administration due later Wednesday morning. Government figures are expected to show crude inventories rose by 2.8 million barrels last week, according to a poll of analysts by S&P Global Platts. They also forecast a 1.9 million barrel fall in gasoline inventories and a 900,000-barrel drop in distillate stocks.

In other energy trading, April gasoline RBJ20, -2.54%  fell 2.6% to $1.5989 a gallon, while April heating oil HOJ20, -2.70%  was off 2.7% at $1.5239 a gallon.

April natural gas NGJ20, +1.40%  rose 0.7% to $1.864 per million British thermal units.

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Oil slumps to 13-month low on fears of economic toll from coronavirus - MarketWatch
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