Oil prices down for sixth day as virus spread worries market

London — Oil futures were set for a sixth day of losses as the death toll from the virus in China rose, but the heavy sell-off of recent sessions was curbed by output outages in Libya and oil cartel Opec comments designed to calm demand fears.

Brent crude was down 51c at $58.81 a barrel at 9.25am GMT, having hit a three-month low of $58.50 on Monday as the virus outbreak triggered a global sell-off of riskier assets.

US West Texas Intermediate (WTI) was down 32c at $52.82 a barrel, after slipping to its lowest since early October in the previous session at $52.13. Both contracts are on track for their worst monthly falls since May.

The US and other countries warned against travel to China as the coronavirus death toll rose to more than 100 and after the virus was detected in more than a dozen countries outside China.

Oil investors are concerned that travel advisories, other restrictions and any sizeable impact on growth in China and elsewhere will dampen demand for crude and related products against a backdrop of plentiful supply.

Japan, one of the world’s top oil buyers, warned about the risks to its economy from the virus, and Asian stock markets continued to suffer.

As the oil price fell below that seen during a December meeting of Opec and its allies led by Russia (Opec+), Saudi Arabia said on Monday that the group could respond to any changes in demand.

Saudi and other Opec producers, however, sought to downplay demand concerns resulting from the virus outbreak.

Opec+ agreed in December to widen their supply cuts by 500,000 barrels per day (bpd) to 1.7-million bpd until the end of March.

While markets wait for an update on China’s oil demand, one eye is on Libya where output is down by nearly 75% to just below 300,000 bpd amid the most extensive oil blockade for years.

“Markets need to get a proper assessment of oil demand in China,” said Olivier Jakob of consultancy PetroMatrix. “And as long as Libya continues to be shut, Opec probably does not need to do anything.”

Reuters