Oil prices have suffered the consequences from the impact of the deadly coronavirus outbreak in China.
According to Fitch Solutions Marco Research analysis, prices fell sharply on Monday after concerns about a protracted economic slump in the Chinese economy as an effect of the outbreak.
“Intraday prices swung lower having so far narrowed to just above USD59 per barrel, a decline of 2.9 per cent off Friday’s closing price for Brent crude,” the analysis stated.
Oil producers Chevron and BP also expressed concern about global growth due to the virus, as did local Woodside, which lost 3.1 per cent
Saudi Arabia’s energy minister Prince Abdulaziz bin Salman sought to reassure markets, with a statement that OPEC would respond to concerns about the coronavirus fallout on oil demand.
“While unclear on the actions to be taken, this could include increasing the duration newly enacted cuts beyond March 2020 or even committing to deeper production cuts.”
Prince Abdulaziz bin Salman was confident that any negative global economic factors could be mitigated by continued or even increased OPEC supply management.
The analysis revealed that the immediate economic impacts were yet to hit physical oil demand, negative oil price sentiment is building following Monday’s price drop.
“As the peak of the virus has yet to be established much of the potential impact on the global economy is unknown. Likewise, the potential level of OPEC+ action is difficult to quantify given the data available,” the report explained.
So far, the death toll has risen to over 100 in China out of 2,744 confirmed cases, with 1,242 of those cases in the Hubei province, where the outbreak originated.