Crude Oil Tumbles as Coronavirus Outbreak Raises Fears for Global Growth
- Journalist: Peter Schmidt
Crude oil stumbled to three-month lows on Monday, as the coronavirus spreads globally. Amidst the fears of deadly virus, China extended its Lunar New Year holiday on Monday, by two days to February 2, 2020. On Sunday, there had been more than 2,700 confirmed cases of coronavirus, including 461 critical cases as the death toll rose to 80. This had a strong impact on Chinese natural resource imports which typically declined due to disrupted industrial activity as the Chinese government imposed restrictions on transportation. China imports more oil than any other nation of the world and hence weaker demand due to impact of Coronavirus in 2020 alleviated the fears of industrialists which expect a drop in daily oil demand of 260,000 barrels, including a 170,000 barrel-a-day loss of jet-fuel demand. Moreover, prices of copper and iron ore have also slumped as investors anticipate supply chain disruptions and a significant slowdown in economic activity. In December, OPEC and other allied producers, including Russia, decided to impose production cuts to balance the price fall. Weighing on sentiments, Asia’s naphtha prices spiraled down by about 14% and were assessed to be $78.78/tonne. Under pressure of the global supply glut, India’s naphtha prices lost momentum and declined by around 3 per cent than last week. As per some analysts, further weakness in crude oil price is anticipated unless the epidemic is contained.