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Crude Oil Sinks 3% amid Fears of Coronavirus, Trims Losses Later

January 27, 2020 at 18:31 by Vladimir Vyun

Futures for both West Texas Intermediate and Brent grades of crude oil sank about 3% today amid spreading fears of the coronavirus (though by now, crude has trimmed losses). With 81 dead in China and almost 3,000 confirmed cases of infection (with the vast majority of them being in China, but isolated cases have been registered all around the globe), concerns arise that perhaps China’s efforts to prevent the spread of the virus were too late. The stock market crashed, and the general market sentiment favors safer assets, not riskier ones. Analysts speculate that the disease can seriously hurt the world’s economy and that in turn will lead to lower demand for crude.

Saudi Arabia tried to calm down markets, claiming that the impact of the infection on oil demand will likely be negligible, pointing out that the SARS outbreak in 2003 did not have a significant impact on oil consumption. But so far markets have not been convinced by such claims.

In other news, Libya’s oil production sank from 1 million to 280,000 barrels per day last week after tribal groups occupied oil fields and terminals on the country’s main oil-producing region. Libya’s state company National Oil Corporation said that efforts were being made to lift the blockade but could not tell when it will happen. Meanwhile, the Al Ahdab oil field in Iraq has resumed production after protests subsided and protesters lifted the blockade.

Futures for delivery of WTI crude oil tumbled $1.37 (2.53%) to $52.82 per barrel as of 18:22 GMT on NYMEX today. Contract for Brent crude sank $1.63 (2.69%) to $59.06 per barrel on ICE.

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