Oil prices dived for the week ending Jan. 24 with the price of West Texas Intermediate (WTI) for March delivery down 7.43 percent and Brent crude oil for March delivery down 6.41 percent, plummeting to two-month lows.
In response to oversupply fears and concerns regarding global economic growth, which have been particularly intensified after the outbreak of the coronavirus in China, crude oil prices were down for the third week in a row.
WTI closed the week at 54.19 U.S. dollars a barrel on the New York Mercantile Exchange, falling below 55 dollars a barrel, while Brent crude finished the week at 60.69 dollars a barrel on the London ICE Futures Exchange, testing the 60-dollar threshold.
The latest data from Chinese health authorities showed that 1,287 confirmed cases of pneumonia caused by the novel coronavirus (2019-nCoV), including 237 in critical conditions, had been reported in China by the end of Friday, which had resulted in 41 deaths.
Collaborating with the downside pressures, the U.S. Energy Information Administration (EIA) reported on Thursday a draw of 0.405 million barrels of crude oil inventories during the week ending Jan. 17, coming in short of market forecast fall of 1.009 million barrels, implying weaker demand and bearish for crude prices.
Meanwhile, the U.S. Dollar Index closed the week nearing two-month highs, eyeing the 98.20 level. A higher index makes the U.S.-dollar-sensitive crude oil more expensive for foreign buyers.
Goldman Sachs Group Inc. warned that crude oil prices could slip further if the outbreak of the coronavirus in China plays out in the same way as the SARS epidemic in 2003.
Analysts said that as travel restrictions in and around the area of the outbreak are already in place, China’s economic activity is expected to run under pressures, which could cut oil demand.
U.S. President Donald Trump tweeted a message on Friday, saying “China has been working very hard to contain the Coronavirus. The United States greatly appreciates their efforts and transparency. It will all work out well.”
China is mobilizing medical staff to aid Wuhan, the center of the novel coronavirus outbreak in Hubei Province, a landlocked province in central China. The province has upgraded its public health emergency response from Level II to Level I. Other provincial-level regions, such as Beijing and Shanghai, have also activated the top-level response to the epidemic situation.
China’s nationwide, large-scale activities for the Lunar New Year celebrations, including temple fairs, winter sports and exhibitions, have been canceled in efforts to minimize the large gatherings of people in the novel coronavirus-related pneumonia prevention and control.
The Spring Festival, or Chinese Lunar New Year, falls on Jan. 25 this year. Festival events and activities are usually held during the week-long national holiday.
The World Health Organization said Thursday it was too early to declare the outbreak of the novel coronavirus in China a public health emergency of international concern, while warning that the number of cases may rise as much about the virus remains unknown. Enditem