Oil prices fell three per cent on Wednesday after hundreds of new coronavirus cases reported in Europe and the Middle East stoked fears that energy demand would decline, and on concerns that the virus would become a pandemic in the United States
Brent crude was down $US1.77, or 3.2 per cent, to $US53.18 a barrel while US West Texas Intermediate (WTI) crude shed $US1.45, or 2.9 per cent, $US48.45 a barrel.
Both benchmarks were on track to end the session at their weakest in more than a year.
“It’s still all about the virus here,” said Bob Yawger, director of energy futures at Mizuho in New York.
“It’s going to be hard for risk assets to gather momentum.”
Oil followed equities lower after reports that dozens people were being monitored in New York for possible coronavirus exposure.
Prices briefly turned positive after the US government reported a drop in gasoline inventories last week.
Crude stocks grew by 452,000 barrels to 443.3 million barrels, the Energy Information Administration said, which was less than the 2-million-barrel rise analysts had expected.
Goldman Sachs cut its 2020 oil demand growth forecast to 600,000 barrels per day (bpd) from 1.2 million bpd, and lowered its Brent forecast to $US60 a barrel from $US63.
“We see oil prices improving through the year, assuming demand begins to normalise” in the second half, it said.
Authorities around the world battled to prevent the spread of coronavirus, which has now been found in about 30 countries.
Gains on Wall Street led stocks across the globe higher, a rebound from a sharp selloff linked to coronavirus worries, but other financial markets felt nagging pressure.
The World Health Organization’s (WHO) chief said while the sudden rise in novel coronavirus cases was “deeply concerning,” the virus could still be contained and did not amount to a pandemic.
US President Donald Trump said he will hold a news conference on the coronavirus.
Germany’s economy is nearing stagnation due to the outbreak, the DIW economic institute said on Wednesday.