Oil prices tumbled for a fourth consecutive day early on Wednesday, as the coronavirus continues to claim lives in Italy and spreads to the Middle East, while U.S. health officials warned that the outbreak is likely to become a pandemic.
At 8:47 a.m. EST on Wednesday, WTI Crude had slumped to below US$50 a barrel, trading down 1.34 percent at US$49.23. The U.S. oil benchmark hit its lowest level in more than a year—since January 2019. Brent Crude was trading below the US$55 mark: the price was down 1.57 percent at US$53.42.
Oil and equity markets took another hit on Wednesday as fears of a global pandemic battering economies and oil demand further intensified. Italy, the worst-hit country outside Asia, had reported 11 deaths from the coronavirus as of early Wednesday, with more than 300 people infected, including children.
Other European countries also started reporting cases of coronavirus infections of people who had visited Italy. Switzerland, Austria, and Croatia, all three bordering Italy to the north and northeast, reported their first coronavirus cases.
The virus spread to the Middle East, too. As of Wednesday, Kuwait had reported 25 cases of coronavirus infections, after confirming 13 new infections today, and all new cases were of people infected after visiting Iran, Gulf News reported.
U.S. health officials said on Tuesday that the coronavirus outbreak is leading to a global pandemic. Related: Oil Tanks On Fears Of Global Economic Crisis
“Current global circumstances suggest it’s likely this virus will cause a pandemic,” Anne Schuchat, principal deputy director of the CDC, said at a news conference on Tuesday, but noted that the immediate risk to the U.S. remains low.
The heightened fear of a global pandemic is heavily hitting equity and oil markets and all risk assets this week, while the head of the International Energy Agency (IEA) said on Tuesday that the agency could additionally trim its oil demand growth projections due to the coronavirus outbreak.
The slump in oil prices comes a week before OPEC and its Russia-led allies are set to discuss how to handle the situation with the depressed demand.
“We continue to hold the view that OPEC+ will need to extend current cuts, along with current Saudi over-compliance through until at least the end of June,” ING strategists Warren Patterson and Wenyu Yao said on Wednesday.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com:
- Shale Decline Inevitable As Oil Prices Crash
- Big Money Still Loves Oil & Gas
- Oil Is Now More Volatile Than Bitcoin