Coronavirus Outbreak and Economic Slowdown Fears Push Oil Prices Lower
A drop in Chinese crude oil and jet fuel demand, and fears of a global economic slowdown prompted by the spread of the deadly Coronavirus have sent oil prices and the broader financial markets into a tailspin over the past week. Stock and commodity markets around the world have also taken a hit as investors seek safe havens till the full extent of the economic risks posed by the outbreak become clearer. Inventory data published by the U.S. Energy Information Administration (EIA) this week also pointed to a larger than expected rise in domestic crude oil inventories, putting further downward pressure on oil prices. WTI crude for March delivery, which had been trading around US$63 per barrel at the beginning of January, has dropped about 15% to US$53 per barrel, while ICE Brent futures have witnessed a similar downward move from US$69 per barrel to US$59 over the same period. In response to falling prices, OPEC is also believed to be considering bringing forward its March meeting to discuss further production cuts. In an interview with state news agency APS on Wednesday, Algeria’s Minister of Energy Mohamed Arkab stated that advancing the meeting to February was very likely “so that we can find the means to ensure market balance”.