(Bloomberg) — Oil is off to the worst start to a year since 1991, tumbling 16% in January on concern that the spread of coronavirus will curb demand for transportation fuels.
Futures fell 1.1% in New York on Friday, capping the worst month since May as investors were rattled by the fear of demand destruction after the World Health Organization declared the outbreak a global health emergency. The U.S. Centers for Disease Control and Prevention called the virus an unprecedented public health threat.
“People are looking at the continued rise in cases and how that’s impacting jet fuel and has made those demand fears worse,” Leo Mariani, energy analyst at KeyBanc Capital Markets Inc. “It’s going to take the virus not being a persistent event and for global demand to show signs of improvement in order to stabilize.”
China, the world’s second largest economy and key driver of oil demand, resorted to unprecedented measures to slow the outbreak, including extending the Lunar New Year holiday and a lock-down in the country’s major cities and provinces. At least two-thirds of China’s economy will stay shut next week, as residents are being told not to return to work or school, or to avoid congregating in public places.
The plunge in oil prices has prompted a push led by Saudi Arabia for the Organization of Petroleum Exporting Countries and its allies to hold an emergency session in February, with Russia signaling for the first time on Friday it was open to holding the meeting earlier.
The coalition is considering a proposal to deepen current production curbs by about 500,000 barrels a day, though there’s no consensus on the idea yet, according to consultant Energy Aspects Ltd. As the oil producer group and its partners, a 23-nation coalition known as OPEC+, have already made steep cutbacks recently,…
Source: FuelFix
