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Oil Sinks to Three-Month Low as Asia Virus Spooks OPEC


By Ann Koh and Grant Smith

(Bloomberg) Oil slumped again to a three-month low as concern that the coronavirus outbreak will hit demand prompted OPEC to consider an emergency meeting.Futures lost as much as 2.6% in New York. Airlines across the world suspended flights to China as the death toll from the virus reached 170, with the World Health Organization meeting to consider issuing a global alarm. The continued spread of the virus, combined with an increase in U.S. crude stockpiles, fanned concerns about a renewed supply glut. Algerian Energy Minister Mohamed Arkab said OPEC could bring its March meeting forward to February to address the situation.

Fears over supply and demand pressure crude

Oil is heading for the biggest monthly drop since May. Authorities in China, the world’s biggest energy consumer, are locking down cities that’s affecting economic and consumer activities. Analysts, including from Sanford C. Bernstein & Co. and Morgan Stanley, are cutting forecasts for the country’s oil consumption, with jet fuel demand most affected.

See also: China Oil Demand Seen Taking a Big Virus Hit in Latest Forecasts

“Oil prices may struggle to find sustained support until the situation is more stable,” said Martijn Rats, global oil strategist at Morgan Stanley.

From China to the World

West Texas Intermediate crude for March delivery fell $1.02 to $52.31 a barrel on the New York Mercantile Exchange as of 8:42 a.m. local time. Brent for the same month declined $1.22 to $58.59 on the London-based ICE Futures Europe exchange after rising 0.5% in the previous session.

Crude spiked briefly on Wednesday after an attempted attack on Saudi Aramco’s Jazan plant by Yemen’s Houthi rebels, but the rally soon faded. WTI is down 14% this month.

“Houthi drone launches into the Jazan region are a dime a dozen, and the refinery located in the region is not of critical importance,” said Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA.

Other oil-market news
  • For the global oil market, the coronavirus epidemic couldn’t have hit a worse place.
  • Profits from converting crude to gasoline in Asia have slumped to the lowest level in almost five months on fears that the rapidly spreading coronavirus will cut consumption in China and other parts of the region.
  • U.S. regulators are finally set to unveil rules they began crafting a decade ago to curb excessive commodity-market speculation. It won’t make much of a difference.
  • Royal Dutch Shell Plc fell to the lowest in more than two years after it scaled back share repurchases.


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