A staff member checks the temperature of a guest entering the casino of the New Orient Landmark hotel in Macau on January 22, 2020, after the former Portuguese colony reported its first case of the new SARS-like virus that originated from Wuhan in China.
Anthony Wallace | Getty Images
Oil dropped to its lowest level since October on Monday, as fears over a potential slowdown in crude demand, sparked by the coronavirus outbreak, continued to pressure prices.
U.S. West Texas Intermediate crude fell 2.5%, or $1.35, to $52.83, putting it on pace for its fifth straight session of losses. At its low, WTI dipped more than 3% to hit $52.13, a price not seen since Oct. 10. The contract is coming off its third straight week of losses and worst week since July, after falling 7.4%.
International benchmark Brent crude fell 2.5%, or $1.53, to $59.16. It’s also coming off its third straight week of losses, and its worst week since Dec. 2018.
The flu-like coronavirus, first identified on Dec. 31 in the Chinese city of Wuhan, has now killed at least 81 people, according to Chinese officials, with 2,862 confirmed cases. The virus has spread to 10 additional countries, including South Korea, Japan and the United States, where the fifth case was confirmed on Sunday.
A slowdown in China’s economy would hit oil demand since the nation is the world’s largest crude oil importer —importing a record 10.12 million barrels per day in 2019 — and the world’s second-largest oil consumer, according to data from the General Administration of Customs.
“The corona virus has quickly morphed from being a curiosity to a potentially more ominous threat to the global economic and oil demand outlook for 2020,” Simmons Energy analyst Bill Herbert said in a note to clients Sunday, while Raymond James analyst John Freeman said on Friday that “the oil market seems to be assuming that the situation will get worse before it gets better.”
On Sunday Saudi Arabia’s energy minister Prince Abdulaziz bin Salman said that OPEC+ would step in to bolster prices if needed, while noting that the sell-off was “primarily driven by psychological factors and extremely negative market expectations adopted by some market participants despite (the virus’) very limited impact on global oil demand,” according to a report from Reuters.
But his comments did little to assuage fears as prices continued to move lower Monday.
“The recent price plunge, due to demand concerns emanating from the coronavirus outbreak, has Saudi Arabia and Russia in full scramble mode,” Again Capital’s John Kilduff said to CNBC. “With winter in the Northern Hemisphere winding down, producers were already staring down a slack demand period, ahead of the summer driving season. It has to be concerning to them that their attempts at jaw-boning the market, over the weekend, have fallen flat,” he added.
– CNBC’s Michael Bloom and Sam Meredith contributed to this report.