By Adedapo Adesanya
Crude oil prices continued in the bearish territory on Wednesday, falling more than two percent, driven by the spread in COVID-19 affecting demand. The disease has now reached other nations in Asia, Europe, Latin America, and the Middle East.
The virus, which had been affecting oil prices for more than a month, spread into oil-producing countries in the Middle East and new markets in America as hundreds of new coronavirus cases have been reported.
Brent crude fell $1.53 or 2.82 percent to $52.73 per barrel on Wednesday as the US West Texas Intermediate (WTI) crude dropped further below the $50 mark by 2.46 percent equivalent to $1.23 to settle at $48.67 per barrel.
Latest reports show that more deaths have been reported in Iran, Italy, and South Korea. Italy has registered more than 400 coronavirus cases and 12 deaths. The virus had killed 19 people in Iran until now and infected 139 others, while South Korea has 11 deaths and a number of cases.
European countries like Georgia, Finland, Macedonia, and Germany with Brazil in Latin America reported fresh and first cases on Wednesday.
Oil prices were looking like they were going to get support earlier on hopes for deeper output cuts by the Organization of the Petroleum Exporting Countries and its allies, including Russia, a grouping known as OPEC+.
Business Post had reported on Tuesday that Saudi Arabia’s Energy Minister, Prince Abdulaziz bin Salman stressed he was confident that OPEC+ would respond responsibly to the spread of the virus when they meet in Vienna over March 5-6.
However, the drop for oil further headed down on report that crude stocks grew by 452,000 barrels to 443.3 million barrels by February 21, the Energy Information Administration (EIA) said on Wednesday, which was less than the 2-million-barrel rise expected by analyst.
Analysts also said that oil prices were under pressure from the recent strength in the US dollar, which generally moves in the opposite direction to oil prices.
With demand falling, Goldman Sachs cut its 2020 oil demand growth forecast to 600,000 barrels per day (bpd) from 1.2 million bpd, and lowered its forecast for Brent crude to $60 per barrel from $63 per barrel set last year.
With all these happening, all eyes will be on OPEC+ even as Saudi Arabia and Russia have so far failed to reach an agreement to cut oil production with dwindling oil prices and plunge in demand. The major hope now is for a comment that will send prices up as all previous ones have proved ineffective.
