Oil prices continued their downward slide on Monday, with Brent crude falling 4.19% by 4:20pm EDT, hitting lows not seen in 13 months as oil demand falters as the death toll for the coronavirus exceeds that of the SARS outbreak in 2002/2003.
Brent crude was trading at $54.26 per barrel—the last time oil was that low was during the last week of 2018. WTI crude was also trading down on Monday, at $49.99—below the $50 threshold—after falling 3.04% on the day.
Both benchmarks are down more than $10 over the last month. WTI is now officially in a bear market, shedding 20% of its price in January.
China has reported 361 deaths from the virus so far—this compares to 349 deaths from SARS. The number of confirmed coronavirus cases in China has reached 17,205—this is double that of SARS.
And oil’s price drop is not just market panic—demand is faltering, with China cutting its March orders from Saudi Arabia, and Sinopec is already cutting its refinery production this month by 600,000 bpd because it is seeing reduced demand. China’s oil demand will likely fall by 20% compared to normal demand this time of year due to the stringent restrictions on travel within China, and well as to and from China. This 20% would be roughly 3 million barrels per day, according to Bloomberg. Related: Jim Cramer: ‘’Fossil Fuels Are Done’’
For now, Chinese refineries are continuing to store unsold fuel, but eventually this could catch up to them should storage become full.
Meanwhile, experts are warning that the current coronavirus outbreak could turn into a full-blown pandemic. The US is taking an abundance of precautions, issuing a mandatory federal quarantine on Friday for Americans flying home from China who had spent time in Hubei Province—it is the first such quarantine in 50 years—since the time of smallpox.
“While we recognize this is an unprecedented action, we are facing an unprecedented public health threat,” Dr. Nancy Messonnier, director of the National Center for Immunization and Respiratory Diseases, said on a Centers for Disease Control and Prevention conference on Friday.
By Julianne Geiger for Oilprice.com
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