Coronavirus Panic Spooks Global Markets, Oil Slides
Oil markets witnessed a sharp drop this week as heightened concerns about the worldwide spread of the Coronavirus triggered panic selling across international financial and commodity markets. The death toll of the virus has now crossed 2,800, with the number of confirmed cases of the virus jumping to over 82,000 this week.
Worryingly, the World Health Organization (WHO) stated on Wednesday that for the first time since the outbreak of the epidemic late last year, more cases of the virus have been reported in other countries than in China. Oil markets now face rising over-supply and growing inventories due to the negative economic impact of the epidemic on global growth and oil demand, with several recent forecasts (including by the EIA, OPEC and IEA) pointing to a significant projected drop in demand in the near-term.
The near-month contract for Brent crude dropped below US$52 per barrel on Thursday, from around US$59 just a week ago. WTI crude slipped past US$50 for the second time this year, dropping to US$48 per barrel in trade on Thursday, the lowest level it has witnessed since the end of 2018.
The timing of the latest oil price slump coincides with a period of renewed activist, investor and regulatory pressure on oil companies to tackle climate change. A number of major international banks have recently announced new financing restrictions on the funding of carbon emissions-heavy projects including the mining of oil sands and coal, as well as projects to drill in ecologically-sensitive regions including the Arctic.