Oil prices fall again as coronavirus continues to weigh on demand
Oil prices fell again today after a brief respite on Wednesday as the worsening coronavirus outbreak continued to take its toll on economies.
Brent crude fell two per cent to $57.68, whilst West Texas Intermediate showed a similar decline to $52.32.
The renewed fall came after a Brent crude rallied by 0.5 per cent yesterday, breaking a six-session streak which took it to its lowest levels since October.
The outbreak of the disease, which began in Wuhan in China’s Hubei province but has now spread to 16 countries and claimed 170 lives, has delivered a sharp hit to Asian markets.
Jeffrey Halley, senior market analyst as Oanda, said: “The Wuhan virus outbreak and its economic fall-out on Asia, the engine room of the world, remains the most crucial issue facing oil markets, with any rally likely to have short half-lives.”
Prices have also been forced downward by a bigger-than-expected build in US crude stocks, which last week increased by almost seven times the expected amount.
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The build has had a knock-on effect in London, where both Shell and BT took a hit from the drop in prices.
Shell, which reported its fourth quarter results this morning, saw its profit fall 48 per cent in the period due to the challenging macroeconomic environment.
As a result of the supply glut, producer group Opec is reportedly discussing extending current supply curbs from March until June.
Algeria’s energy minister Mohamed Arkab even suggested that the Opec+ meeting could be moved from March to February to address growing concerns.
At its biannual meeting in Vienna in December, the cartel agreed to increase production cuts by 500,000 barrels a day, taking the total supply curb to 1.7m barrels.
In addition Saudi Arabia pledged a voluntary extra 400,000 barrels per day, taking total production cuts to 2.1m.