Oil futures ended lower on Friday, suffering hefty monthly and weekly declines, as traders assessed the spread of China’s coronavirus and its potential impact on global economic growth and demand for crude.
“Oil prices were treated without mercy this week…as concerns intensified over China’s coronavirus outbreak hitting demand for fuel,” Lukman Otunuga, senior research analyst at FXTM, told MarketWatch.
“A sense of unease and uncertainty about the widening crisis and ramifications to global growth may result in further pain for oil,” he said. “Given how China is the world’s largest energy consumer, a slowdown in demand has the ability to bruise and potentially destabilize oil markets.”
Otunuga said the settlement below $52 for U.S. crude benchmark could prompt prices to test $50, which would be the lowest since January of last year.
Read: ‘Hurricane-force headwinds’ pull oil lower, but the losses aren’t built to last
On Friday, West Texas Intermediate crude for March delivery
CLH20, -0.98%
fell by 58 cents, or 1.1%, to settle at $51.56 a barrel on the New York Mercantile Exchange, the lowest front-month contract settlement since Aug. 7.
March Brent crude
BRNH20, -0.17%
lost 13 cents, or 0.2%, to end at $58.16 a barrel on ICE Futures Europe on the contract’s expiration day. April Brent
BRNJ20, +0.07%,
which is now the front-month contract, shed 71 cents, or 1.2%, to $56.62 a barrel.
WTI, the U.S. benchmark, logged a 4.9% weekly fall, which led to a 15.6% January decline, according to Dow Jones Market Data. That was the largest monthly loss since a 16.3% May decline for the front-month contract. The now expired March contract for Brent, the global benchmark, lost 4.2% for the week, for a nearly 12% January fall.
Read: Jet fuel demand takes a hit as coronavirus leads to travel restrictions
Oil saw some earlier support from reports Saudi Arabia was talking with fellow members of the Organization of the Petroleum Exporting Countries and its allies about moving up an upcoming policy meeting from March to early February. Previous reports said OPEC members, rattled by the price slide, were weighing talks to further reduce output or extend production curbs currently scheduled to run through March.
But some analysts argued that moving the meeting could backfire.
“We do not believe it would be constructive to bring the ‘OPEC+’ meeting forward: it could be interpreted by the market as a panic response and thereby have the opposite effect,” said Carsten Fritsch, analyst at Commerzbank, in a note.
“What is more, it is not possible at present to predict the extent to which the coronavirus will ultimately dampen demand,” he said. “Estimates range from a few hundred thousand to 1 million barrels per day in the current quarter. Output can also be adjusted at short notice without the need for a meeting beforehand.”
At least 213 people have died and about 9,700 have been sickened by the coronavirus, according to the latest figures from China’s National Health Commission. The U.S. State Department on Friday urged Americans not to travel to China.
In other energy trading, February gasoline
RBG20, -0.11%
lost 0.3% to $1.4887 a gallon, with prices down over 12% for the month. February heating oil
HOG20, -0.87%
fell 0.9% to $1.6245 a gallon, for a monthly loss of nearly 20%—the largest since March 2015 and lowest settlement since August 2017. The February contracts expired at the day’s settlement.
March natural gas
NGH20, +0.77%
edged up by 0.7% to settle at $1.841 per million British thermal units after settling Thursday at the lowest since March 2016. Prices marked a monthly loss of nearly 16%.
