Oil prices down by 4% as Coronavirus spread across Asia-Analysts

Analysts on Monday said, oil prices fell by 4 percent as  coronavirus spread outside China and Asia, rekindling fears that a protracted global outbreak would impact economic growth and oil demand around the world.

Analysts revealed that, West Texas Intermediate crude was plunging by 3.73 percent at $51.40, while Brent crude was tumbling 3.75 percent at $55.78, after Italy reported a sharp rise of coranavirus cases over the weekend, with more than 200 infected people as of Monday, the biggest outbreak outside Asia so far.   

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The market panic that the coronavirus may now become a global pandemic sent all Asian and European stock markets deep into the red on Monday, with the blue-chip index in Milan tumbling by 5 percent early afternoon local time.

The renewed fear of slowing economic growth and lower oil demand growth gripped the oil markets, which followed the equity markets sell-offs.

“We should not underestimate the economic disruption, as a super spreader could trigger a massive drop in business activity around the globe of proportions the world has never dealt with before,” AxiCorp’s chief market strategist Stephen Innes said in a note. 

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“We believe the virus’ effect on oil demand will shave some 400,000 barrels a day from global consumption growth, taking us to the lowest level in nearly a decade,” ING’s Head of Commodity Strategy, Warren Patterson, said on Monday.

Due to the demand destruction from the outbreak, ING now sees Brent Crude prices averaging $55 a barrel in Q1, and just $59 per barrel for the full year.