Oil futures threatened to extend a losing streak to five sessions Thursday as worries about the rapid spread of COVID-19 outside of China continued to drive markets.
West Texas Intermediate crude for April delivery CLJ20, -4.78%, the U.S. benchmark, fell $1.47, or 3%, to $47.28 a barrel. May Brent crude BRNK20, -3.84% dropped $1.42, or 2.7%, to $51.39 a barrel after taking out the February low for a most-active contract
“The COVID-19 virus still has the oil market in a stranglehold,” said Carsten Fritsch, commodities analyst at Commerzbank, in a note.
He said weakness in the gasoil market, the European term used for diesel fuel and heating oil, underlined the demand concerns stemming from the spread of the viral outbreak. The gasoil/Brent crack spread at $7 a barrel stands at its lowest since the summer of 2016, he said, noting that the spread typically bottoms out in the summertime for seasonal reasons.
“When the coronavirus brings areas of public life and production to a standstill, this results in significantly lower demand for diesel for transport and production, as well as for kerosene in aviation,” Fritsch said.
“In addition, the winter has been unusually mild, which reduces the demand for heating oil. Refineries are likely to cut their output considerably in response to these developments. This has already happened in China, where there is talk of crude oil processing being reduced by 4 million barrels per day. In turn, the lower demand from refineries is depressing the crude oil price.”
In other energy trade, April gasoline RBJ20, -4.44% dropped 4.1% to $1.50 a gallon, while April heating oil HOJ20, -3.09% fell 2.9% to $1.4535 a gallon.
April natural gas NGJ20, -4.74% dropped 3.7% to $1.769 per million British thermal units.
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February 27, 2020 at 08:04PM
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Oil threatens to extend losing streak to 5 days as coronavirus keeps market in ‘ stranglehold’ - MarketWatch
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