(Bloomberg) – Oil has dropped to its lowest level in two months, assuming that the coronavirus epidemic in China could lower demand.
Futures fell 3.5% to less than $ 55 a barrel in New York on Thursday, the world's largest oil importer effectively quarantined a major city to contain the SARS virus, which, according to Goldman Sachs Group Inc., could reduce global consumption. The alert overshadowed concern over Libya's export halt.
"The sentiment has turned negative," as the coronavirus is expected to affect demand, said Andrew Lebow, senior partner with New York consultant Commodity Research Group.
Oil bears the brunt of anxiety due to the potential risk of traveling, especially since it occurs just before the Lunar New Year holidays, the largest human migration in the world. Goldman Sachs predicts that the virus could jeopardize global demand for 260,000 barrels per day this year – with jet fuel accounting for about two-thirds of the loss – if the SARS outbreak in 2003 is a guide.
The West Texas Intermediate futures contract for March delivery slipped from $ 1.77 to $ 54.97 a barrel at 10:06 a.m. on the New York Mercantile Exchange after falling to $ 54.77, the lowest since November 20.
A measure of volatility in the oil markets reached its highest level since October.
Brent futures for March settlement fell $ 1.83 to $ 61.38 / barrel. The global benchmark traded with a premium of $ 6.42 to WTI for the same month.
See also: Nodding Donkeys could hit the sales block in the midst of oil shale processing
China has banned travel from Wuhan, a city of 11 million, in an effort to stop the spread of the new virus that has killed at least 17 people so far and infected hundreds of people. The country is by far the largest importer of oil. The World Health Organization will meet again on Thursday to determine whether to declare the epidemic a public health emergency of international concern after delaying its decision on Wednesday.
The strongman of eastern Libya kept virtually all of the country's oil fields closed, in defiance after world leaders failed to persuade him to sign a deal peace ending the civil war of the OPEC country. Libya's oil production plunged to the lowest level since August 2011, according to data compiled by Bloomberg.
In the U.S., an Energy Information Administration report released Thursday morning is expected to show that domestic crude supplies increased 800,000 barrels last week, according to median estimates by analysts polled by Bloomberg. The American Petroleum Institute reported a 1.57 million barrel increase in crude inventories.
– With the help of James Thornhill, Dan Murtaugh and Saket Sundria.
To contact reporters on this story: Grant Smith in London at firstname.lastname@example.org; Sheela Tobben in New York at email@example.com
To contact the editors responsible for this story: James Herron at firstname.lastname@example.org, Jessica Summers, Catherine Traywick
<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "For more articles like this, visit us at bloomberg.com"data-reactid =" 41 "> For more articles like this, visit us on bloomberg.com
<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Subscribe now to stay one step ahead of the most reliable source of business information. "data-reactid =" 42 "> Subscribe now to stay ahead with the most trusted source of business information.
© 2020 Bloomberg L.P.