(Bloomberg) — Oil resumed declines as the biggest jump in U.S. crude stockpiles in almost three months added to concern over demand in a market already grappling with China’s spreading coronavirus.
Futures lost as much as 2% in New York, trading near the three-month low just above $52 a barrel reached earlier this week. U.S. inventories rose by 3.5 million barrels last week, fanning concerns that global markets soon face a renewed supply glut. Airlines across the world suspended flights to China as the death toll from the virus reached 170, with the World Health Organization meeting to consider issuing a global alarm.
Oil is heading for the biggest monthly drop since May as the virus crimps global travel and economic activity within China, the world’s biggest energy consumer.
Analysts are cutting their forecasts for Chinese crude consumption due to the virus, with jet fuel demand most affected. Sanford C. Bernstein & Co. reduced its estimate for oil demand growth in the nation this year to 100,000 barrels a day from 350,000. Morgan Stanley said consumption growth could take a 75,000 barrel-a-day hit if the outbreak continues to escalate for three to four months.
“Oil prices may struggle to find sustained support until the situation is more stable,” said Martijn Rats, global oil strategist at Morgan Stanley.
The impact of the potential demand hit is being heightened as the market is awash with crude, particularly from countries outside OPEC. The cartel is considering pushing forward a meeting initially scheduled for March, according to Algeria’s energy minister, amid the price slump.
See also: China Oil Demand Seen Taking a Big Virus Hit in Latest Forecasts
West Texas Intermediate crude for March delivery fell $1.01 to $52.32 a barrel on the New York…
Source: FuelFix
