Oil falls as spectre of China virus looms over fuel demand
Oil market falls too big to offset with output cuts, IEA warns
By Administrator_India,
Oil prices fell on Thursday on concern that the spread of a respiratory virus from China could lower fuel demand if it stunts economic growth in an echo of the SARS epidemic nearly 20 years ago.
Brent crude futures LCOc1 were down 76 cents, or 1.2%, at $62.45 a barrel, having earlier touched their lowest since Dec. 4 after losing 2.1% in the previous session.
U.S. West Texas Intermediate futures CLc1 fell 85 cents, or 1.5%, to $55.89 a barrel after earlier falling to the lowest since Dec. 3. The contract declined 2.7% on Wednesday.
The new coronavirus has killed 17 people through respiratory illness since it emerged late last year in Wuhan, a city of 11 million people in central China.
Nearly 600 cases have been confirmed, with cases detected as far as away as the United States, and city authorities have shut transport networks, urging residents not to leave to prevent the contagion spreading.
The potential for a pandemic has stirred memories of the Sudden Acute Respiratory Syndrome outbreak in 2002-03, which also started in China and dented economic growth and caused a slump in travel.
“We estimate a price shock of up to $5 (a barrel) if the crisis develops into a SARS-style epidemic based on historical oil price movements,” JPM Commodities Research said in a note.
The U.S. bank maintained its forecast for Brent to average $67 a barrel in the first quarter and $64.50 a barrel throughout 2020.
U.S. crude stockpiles rose last week by 1.6 million barrels, against expectations of a drop, the American Petroleum Institute said late on Tuesday.
