Oil steadies, but concern over China virus weighs

Singapore —  Oil prices were steady on Friday, but on track for a fall of up to 5% for the week on growing concern that fuel demand will weaken as the spread of a respiratory virus from China that has killed 25 so far dents travel and darkens the economic outlook.

Brent crude futures were 4c lower to $62 a barrel by 2.25am GMT, its lowest since December 4, after falling 1.9% the previous session. For the week, Brent is down 4%.

US West Texas Intermediate futures were down by 1c to $55.58 a barrel, its lowest since November 29. The contract fell 2% on Thursday and is 5% lower for the week.

The new coronavirus has infected more than 800 so far in China, with 25 dead as of Thursday, according to China’s National Health Commission. The World Health Organisation has declared the situation an emergency, but stopped short of declaring the epidemic of international concern.

Most of the cases are in the central Chinese city of Wuhan, where the virus is believed to have originated late in 2019, though cases have now been found in at least seven other countries.

In a note on a Friday, ANZ Bank warned that further spread could crimp energy demand from the transportation sector.

On the supply side, US crude oil and distillate inventories fell last week while petrol stockpiles grew for an 11th consecutive week to an all-time high, the Energy Information Administration said on Thursday.

Crude inventories fell 405,000 barrels in the week to January 17, government data showed, less than analysts’ expectations in a Reuters poll for a 1-million barrel drop.

Reuters