On Wednesday, Prices for Crude oil gave up early gains and slipped for a fourth day as fears of a coronavirus pandemic extended as the outbreak spread in many countries outside China.
Brent crude decreased by 31 cents, or 0.6%, to $54.64 a barrel by 0753 GMT, whereas U.S. West Texas Intermediate crude fell 16 cents, or 0.3%, to $49.74.
Fears regarding a pandemic have increased as authorities around the world are fighting to prevent the spread of coronavirus, which has now affected around 30 countries.
Asian shares decreased on Wednesday as a warning issued to Americans by the U.S., to get ready for the possibility of a pandemic stunned Wall Street yet again and pushed yields on safe-haven Treasuries to record lows. [MKTS/GLOB]
“The shift in focus from just an external demand shock from China to an overwhelming U.S. economic blow could send oil prices into a faster tailspin,” Stephen Innes, market strategist at AxiTrader, stated in a note.
“The reality is that the coronavirus has not been contained and is now spreading like wildfire across the world, and you can’t put that smoke back in the wood,” he said.
Hopes of deeper Output
Earlier, oil prices increased on short-covering and with the hopes for deeper output cuts by the Organization of the Petroleum Exporting Countries (OPEC) along with its partners including Russia, a grouping known as OPEC+.
“But the upside was limited as risk of the coronavirus outbreak hitting oil demand is growing,” said Hideshi Matsunaga, an analyst at Sunward Trading. OPEC and OPEC+ are due to meet in Vienna over March 5-6.
“A weekly close below $55.00 a barrel on Brent crude will have the alarm bells ringing amongst the OPEC+ grouping,” according to a note by Jeffrey Halley, a senior market analyst at OANDA.
Saudi Arabia’s energy minister said on Tuesday he was confident that OPEC and its partners would respond responsibly to the spread of the virus.
The International Energy Agency’s (IEA) outlook for global oil demand growth has decreased to its lowest level in last 10 years, Executive Director Fatih Birol pointed out on Tuesday, adding it could fall further down as a result of the outbreak.
It is expected that U.S. crude inventories to rise for the fifth week running. The American Petroleum Institute (API) stated on late Tuesday that crude stockpiles increased 1.3 million barrels last week. Government data which was due at 10:30 a.m. EST (1530 GMT) on Wednesday was expected to display a 2 million barrel rise, as per a poll conducted by Reuters [EIA/S] [API/S].
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