Oil prices fell on Friday and were on track for a fourth straight weekly loss on mounting worries about economic damage from the coronavirus that has spread from China to around 20 countries, killing more than 200 people.
Prices briefly found support after Russian Energy Minister Alexander Novak said Russia was ready to bring forward a meeting of OPEC and its allies to February from March to address a possible hit to global oil demand from the virus.
Novak said he was in discussions with OPEC leader Saudi Arabia and that the oil-producing nations would need several more days to assess the impact and decide on the date of the meeting.
“The cartel stands ready to act again if necessary but may accept the short-term pain for now on the expectation that the economic consequences won’t be as bad as people fear and (the) price will bounce back to more acceptable levels on its own,” said Craig Erlam, senior market analyst at OANDA.
Brent crude fell 13 cents to settle at $US58.16 a barrel and was down about 4 per cent on the week.
US West Texas Intermediate (WTI) fell 58 cents to end the session at $US51.56 a barrel, down 4.8 per cent on the week. During the session, prices sank to as low as $US50.97 a barrel, the lowest since early August.
Both benchmarks had risen more than $US1 a barrel early in the session.
Global equity markets were poised for their first monthly loss since August and Wall Street’s main averages tumbled more than 1 per cent on Friday, as mixed corporate earnings added to worries over the impact of the coronavirus.
Disruptions in supply chains and travel curbs prompted economists to temper growth expectations for China, the world’s second-largest economy.
Goldman Sachs said the outbreak was likely to shave 0.4 percentage point from China’s economic growth in 2020 and could also drag the US economy lower.
The outbreak could cut China’s oil demand by more than 250,000 barrels per day (bpd) in the first quarter, analysts said.
“It seems almost certain that the coronavirus will curb Chinese economic growth and commodities demand this quarter,” Capital Economics analysts said in a note.
“Should the coronavirus have a comparable effect as SARS, it could reduce China’s oil demand by roughly 400,000 barrels per day.”
Many companies in China planned to return to work on Friday after a week-long celebration of the Lunar New Year holiday, but authorities ordered businesses in many areas to stay shut longer to contain the disease.
Growth in China’s factory activity faltered in January. The Purchasing Managers’ Index (PMI) fell to 50.0 from 50.2 in December, China’s National Bureau of Statistics (NBS) said. The 50-point mark separates growth from contraction.
A Reuters poll on Friday indicated oil prices should remain supported near current levels this year as political risks and OPEC-led output curbs offset growing supply.
The poll of 50 economists and analysts was conducted mainly before the coronavirus outbreak.
OPEC oil output plunged in January to a multi-year low as top exporter Saudi Arabia and other Gulf members over delivered on a new production-limiting accord and Libyan supply dropped due to a blockade of ports and oilfields, a Reuters survey found.
Still, global supplies remain abundant. US crude production climbed 203,000 bpd to a record 12.9 million bpd in November, the US Energy Information Administration said in a monthly report.