Oil prices fell more than 2% on Thursday to the lowest in three months on concerns over the potential economic impact of the coronavirus that continues to spread worldwide, while the market also considered the possibility of an early OPEC meeting.
Brent crude LCOc1 was down $1.52, or 2.5%, to settle at $58.29 a barrel. The global benchmark earlier dropped to $57.71, its lowest since Oct. 8.
U.S. crude CLc1 fell $1.19, or 2.2%, to settle at $52.14 a barrel, after hitting a session low at $51.66 a barrel, its weakest since Oct. 10.
Prices have steadied in recent days at three-month lows as investors tried to assess what economic damage the virus might inflict and its impact on demand for crude oil and its products.
“The overriding bearish price influencer remains as the coronavirus that appears to possess much additional risk of spreading rather than any nearby suggestion of containment,” Jim Ritterbusch, president of Ritterbusch and Associates, said in a note.
“Until this health trend is reversed, this month’s sharp downtrend in the oil is also unlikely to be reversed.”
After the markets settled, the World Health Organization declared that the coronavirus outbreak in China, which has killed 170 people there, now constitutes a public health emergency of international concern.
Crude futures pared losses in post-settlement trade following the WHO’s announcement.
“Over the last week prices have dropped,” said Gene McGillian, director of market research at Tradition Energy in Stamford, Connecticut. “At a certain point, you have a bit of an exaggerated reaction and the market can correct.”
The number of infections in a health crisis that is forecast to sharply dent China’s economy, the world’s second-largest, has already surpassed the total in the 2002-2003 Severe Acute Respiratory Syndrome (SARS) epidemic.
The United States reported its first case of person-to-person transmission of the coronavirus on Thursday, with the U.S. Centers for Disease Control and Prevention confirming six cases of the virus in the United States.
Saudi Arabia has opened a discussion about moving the upcoming OPEC+ policy meeting to early February from March, four OPEC+ sources said, after the recent slide in oil prices.
No final decision over the new date of the meeting has been made, and not all OPEC members are on board yet, with Iran a possible contender to oppose the move, the OPEC+ sources said.
“The only thing that can change the current trend is an emergency OPEC meeting,” said Olivier Jakob of consultancy Petromatrix.
Source: Reuters (Stephanie Kelly; Additional reporting by Aaron Sheldrick in London; Editing by Jan Harvey; Editing by Marguerita Choy and David Evans)