Oil sinks to lowest price in a year as virus fears grow
Oil prices today hit their lowest level since January last year as fears about the impact of the coronavirus on the world economy grew.
Brent crude was down 4.3 per cent to $51.14 a barrel this afternoon as the virus continues its spread outside of China.
Any impact on global consumption or manufacturing patterns will suppress global demand for crude.
Consultants Facts Global Energy said demand for oil this year would increase at a level it called “practically zero” due to the outbreak.
This has led to concerns there could be oversupply in the world oil market towards the end of this year.
“The optics of the market look poor, though it’s interesting to me that the Chinese Teapot (refiners) were returning as the growth of the virus within China was slowing,” said Scott Shelton, energy broker with ICAP.
Both the UK government and President Trump have tried to reassure the public of the limited risk from the virus.
“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 in New York.
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The OPEC group of countries and its allies including Russia, known as OPEC+, will meet next week.
Analysts look closely to see if more production cuts are agreed.
US crude stocks increased by 452,000 barrels to 443.3m barrels.
This fell short of the predicted two million barrel increase.