Market fears and weak oil demand have prompted a continued oil price slide, with both the Brent crude and WTI crude benchmarks falling on Monday to lows not seen since the end of 2018.
WTI was trading below the $50 per barrel mark, down $0.79 (-1.57%) on Monday afternoon near 4pm. Brent crude was trading down $ 1.20 (-2.20%) at $53.27.
The coronavirus has so far infected more than 40,000 people and claimed the lives of over 900—more than the SARS outbreak of 2002/2003. Travel restrictions to, from, and within China, in an effort to contain the virus and keep it from spreading, have cut into oil demand, as has a slowdown in industrial activities.
Despite the travel restrictions, the virus has reared its ugly head in 25 countries, including the US and Britain—the latter of which declared today the virus an “imminent threat” to public health.
PetroChina and Sinopec, the two largest oil refineries in China, have cut refinery run rates to compensate, alongside independent refineries who have done the same.
So far, oil has slid 25% off this year’s peak as a result.
OPEC failed to adequately quash market fears on Monday as recommendations by its joint technical committee both to extend the current production cuts to the end of the year and to deepen the cuts did not gain the immediately support of oil behemoth Russia, with the country saying it needed more time to evaluate the market situation and the effect the coronavirus would have on it.
The economic effects of the coronavirus are profound, with analysts downgrading China’s GDP growth for 2020, with most agreeing that the first half of 2020 will drag down the entire year.
Citi downgraded China’s full year growth forecast from 5.8% to 5.5%, and MacQuarie downgraded its outlook from 5.9% to 5.6%. Meanwhile, Moody’s kept its forecast at 5.8%.
By Julianne Geiger for Oilprice.com
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