Both West Texas Intermediate (WTI) for March delivery and Brent crude for March delivery fell during the week, heading for big monthly loss on Friday.
Brent crude prices dropped this week from a potential climb toward 60 U.S. dollars per barrel after the U.S. Energy Information Administration (EIA) report announced substantial inventory increases and amid the coronavirus outbreak in China.
Rising crude inventories are only part of the problem. The market is concerned that the recent coronavirus outbreak will stymie oil demand in China.
On Thursday, World Health Organization (WHO) Director-General Tedros Adhanom Ghebreyesus said that the novel coronavirus outbreak has become a public health emergency of international concern (PHEIC).
Speaking at a press conference after a closed-door meeting of the Emergency Committee, he stressed that the WHO disfavors or even opposes imposing travel or trade restrictions on China.
Under the International Health Regulations (IHR), the WHO director-general has the authority to determine that an outbreak constitutes a PHEIC when certain conditions are met. The designation is aimed at mobilizing more international resources to deal with the epidemic.
Analysts believe that current market fundamentals have prevented any significant bull run on oil prices and the market is susceptible to softer prices if the outbreak stretches through February.
“The uncertainty in oil prices and world demand, especially with the recent international geopolitical tension and health events, have continued to stifle acquisition and development activity for U.S. oil and gas producers,” Robert Martinez, CEO of Titan Rock Exploration and Production, told Xinhua. Enditem