Jan 27, 2020

Crude oil prices fall to 3-month low over coronavirus fears

Pedestrians wearing face masks cross a road in Hong Kong on Jan. 27. Photo: Anthony Wallace/AFP via Getty Images

Crude oil prices fell to their lowest levels in over three months Monday as traders weigh how much the spread of the coronavirus will eat into demand because travel and economic activity is curtailed.

Why it matters: The sharp drop, which follows declines last week, shows how the spreading virus is rippling through global markets.

  • Brent crude has declined by roughly $7-per-barrel over the last week and is currently trading around $58.29.
  • "I think we’re close to peak hysteria, so yes the move is justified. We’re in full panic mode," Global Risk Management trader Edward Marshall tells the Wall Street Journal.

The intrigue: OPEC and allied producers "have held preliminary discussions about making deeper cuts to oil production if the fallout from the coronavirus outbreak keeps weighing on crude prices," the Financial Times reports this morning.

What they're saying: Saudi Energy Minister Abdulaziz bin Salman sought to downplay concerns about the virus having a major effect on oil consumption.

  • "[T]he current impact on global markets, including oil and other commodities, is primarily driven by psychological factors and extremely negative expectations adopted by some market participants despite its very limited impact on global oil demand," he said in a statement.

Go deeper: Coronavirus fears start to weigh on global business and stock markets

Go deeper

Oil markets may be overly spooked by coronavirus' energy impact

Two pedestrians in Jiangtan Park on Jan. 27 during the lockdown in Wuhan, China. Photo: Getty Images

Some analysts are beginning to wonder if oil markets are overly spooked by the potential for the coronavirus to dent energy demand as travel and economic activity are crimped.

Why it matters: The human health toll is what matters most, with at least 107 people dead so far. But the coronavirus is also rattling markets, and is arriving when the oil market was already awash in supplies and demand growth was modest.

Go deeperArrowJan 28, 2020

OPEC considers production cuts as coronavirus impacts China's oil demand

Photo: Ryad Kramdi/AFP via Getty Images

OPEC's possible responses to the spreading coronavirus that's hurting oil demand and prices are starting to come into view.

Why it matters: Besides killing more than 360 people so far, the outbreak is severely curtailing airline and economic activity in China, the world's largest oil importer and second-largest oil consumer.

Coronavirus throws oil demand into reverse for first time in a decade

The International Energy Agency's monthly market analysis released Thursday says global oil demand will fall by 435,000 barrels per day during this quarter compared to the same period a year ago.

Why it matters: It's the first quarterly contraction in over a decade.