Oil prices fell over two percent on Thursday, plunging for a fifth day to their lowest since January 2019 as a rise in new coronavirus cases outside China fueled fears of a pandemic that could slow the global economy and dent demand for crude.
Brent crude LCOc1 was down $1.15, or 2.2 percent, at $52.28 a barrel at 1150 GMT. West Texas Intermediate (WTI) futures CLc1 fell by $1.04 cents, or 2.1 percent, to $47.69 a barrel. For the first time since the start of the coronavirus outbreak erupted in China, the number of new coronavirus infections outside the country exceeded new Chinese cases.
Spread of CCOVID-19 has raised concerns over fuel demands
The spread of the virus to large economies including South Korea, Japan and Italy has raised concerns that growth in fuel demand will be limited. Consultants Facts Global Energy forecast oil demand would grow by 60,000 barrels per day in 2020, a level it called "practically zero", due to the outbreak. US President Donald Trump sought to assure Americans on Wednesday evening that the risk from coronavirus remained "very low", but global equities resumed their plunge, wiping out more than $3 trillion in value this week alone.
"The negative price impact would intensify if the coronavirus were declared pandemic by the World Health Organization, something that looks imminent," said PVM Oil Associates analyst Tamas Varga. "The mood is gloomy and the end of the tunnel is not in sight – there is no light ahead just darkness. Not even a refreshingly positive weekly U.S. oil report was able to lend price support."
Gasoline stockpiles dropped by 2.7 million barrels
Gasoline stockpiles dropped by 2.7 million barrels in the week to February 21 to 256.4 million, the Energy Information Administration (EIA) said on Wednesday, amid a decline in refinery throughput. Distillate inventories fell by 2.1 million barrels to 138.5 million.
US crude oil stockpiles increased by 452,000 barrels to 443.3 million barrels, the EIA said, which was less than the two-million-barrel rise analysts had expected. The crude market is watching for possible deeper output cuts by the Organization of the Petroleum Exporting Countries and its allies including Russia, a group known as OPEC+.
"Oil is in freefall as the magnitude of global quarantine efforts will provide severe demand destruction for the next couple of quarters," said Edward Moya, senior market analyst at OANDA. "Expectations are growing for OPEC+ to deliver deeper production cuts next week." OPEC+ plans to meet in Vienna on March 5-6.
