Oil price dips for sixth straight session

Tokyo — Oil futures fell for a sixth session on Tuesday as the spread of a new virus in China and several countries raised concerns about a hit to economic growth and oil demand.

Brent crude was down 37c, or 0.6%, to $58.95 at 3.50am GMT, after touching a three-month low on Monday at $58.50, as the virus outbreak triggered a global sell-off in riskier assets.

US West Texas Intermediate was down 29c, or 0.6%, at $52.85, after slipping to its lowest since early October in the previous session at $52.13.

The US warned against travel to China and other countries put out advisories as the death toll from the spreading coronavirus outbreak rose to more than 100 people and left millions of Chinese stranded during the biggest holiday of the year.

Oil investors are concerned travel advisories, other restrictions and any sizeable effect on growth in the world’s second-biggest economy and elsewhere will dampen demand for crude and its products, amid plentiful supply.

“The near-term potential of a nationwide travel shutdown is high,” said Ian Bremmer, president of Eurasia Group, a political and market risk consultancy.

Barclays said oil prices could be $2 below its forecasts of Brent to be $62 a barrel over 2020 and $57 a barrel for WTI.

The bank expects the grouping known as Opec+ to take further steps to support the market when it meets in March if demand lags its forecast of 600,000-800,000 barrels a day in the first quarter of 2020.

“While it remains to be seen how quickly the spread of the virus is contained, experience from the 2003 SARS outbreak suggests demand worries are likely overdone,” the bank said.

The Organisation of the Petroleum Exporting Countries (Opec), has been trying to play down the fallout from the virus, while Saudi Arabia, its de facto leader, said on Monday the group could respond to any changes in demand.

Opec and producers including Russia, known as Opec+, have been cutting supply to support oil prices for nearly three years and recently agreed to withhold a further 500,000 barrels a day to 1.7 million until March.

Underlining the supply concerns, a Reuters poll forecast US crude stockpiles to have risen last week.

Reuters