Oil prices extended their losses Monday, dragged down by concerns about lower demand in China, the world’s most significant oil importer, after a coronavirus outbreak.
Brent and U.S. West, Texas Intermediate crude, fell for a fourth straight week last week after airlines halted flights to China. Supply chains across the world’s second-largest economy have been disrupted, urging its most significant refiner Sinopec to cut output.
Brent crude was at $56.14 per barrel down 48 cents, i.e., 0.9%, after losing approximately 12% in January, the steepest month-to-month drop since November 2018.
U.S. West Texas Intermediate crude tanked 24 cents to $51.32 per barrel, after earlier reaching a session low of $50.42. The front-month WTI price fell 15.6% in January, the biggest month-to-month fall since May.
China’s measures to support its economic system may help put a floor beneath oil prices in the short interval, even though the scope for oil demand remains bearish, stated Michael McCarthy, chief market strategist at Sydney-based CMC Markets.
China’s factory activity halted in January as export orders dropped, and analysts expect a giant fall in February’s data as the virus epidemic hits demand in the nation.
People’s Bank of China planned to release more liquidity to boost its economy on Monday and promised over the weekend to make use of various monetary policy tools to help ease the impact of the novel coronavirus epidemic.
The Organization of the Petroleum Exporting Countries (OPEC)and its aides may bring forward a March meeting to February to debate the influence on oil demand from the virus. Already, OPEC and non-OPEC’s Joint Technical Committee have slated to meet in early February to evaluate the impact of the virus.
OPEC’s oil production tanked in January to the lowest since 2009 after a number of members headed by Saudi Arabia over-delivered on a new settlement to pare output and as Libya’s supply fell.