The oil market closed one of its worst weeks since May 2018 on January 24, as the coronavirus outbreak that began in China has impacted crude prices.
The coronavirus was first identified on December 31 in the Chinese city of Wuhan and has killed at least 26 people and infected over 900 worldwide. So far, the virus has extended to South Korea, Japan, Thailand, Vietnam, and the United States, among others. On Friday, the Centers for Disease Control and Prevention confirmed the second case in the U.S.
Many are concerned that the outbreak could slow down economic growth, as occurred with the SARS virus nearly 20 years ago. If so, the economic decline could be far worse than expected.
China’s economic slowdown would affect crude demand. The Asian giant is the second-largest oil consumer behind the U.S and also the largest importer.
China imported a record 10.12 million barrels per day in 2019, according to China’s General Administration of Customs.
It is no wonder, then, that on January 24 the market seemed to be reacting to this situation.
— EIA (@EIAgov) 23 de enero de 2020
Friday, January, 24 marked a day of price drops in the oil market. The West Texas Intermediate fell by 2.7%. This U.S. benchmark stood at $53.98 per barrel, the lowest since November 1. This is the fourth consecutive day of drops. Therefore, it closes the week with an 8% decline.
For its part, Brent went down by 2.4%. The international crude reference stood at $60.39 per barrel. With this, its weekly drop is estimated at 6.5%.
Several typically upward events occurred this week in the oil market, but they did not suffice to bring prices up.
For instance, the U.S. Energy Information Administration announced on Thursday that the country’s crude supplies dropped by 400,000 barrels from the week ending on January 17; below analysts’ forecasts, which had anticipated a drop by 500,000 barrels.
Meanwhile, Libya’s oil production fell as the rebels blocked exports.
Oil Market, January 24
|Monday, January 20, 2020||$ 65,20||$ 58,73|
|Tuesday, January 21, 2020||$ 64,59||$ 58,34|
|Wednesday, January 22, 2020||$ 63,21||$ 56,74|
|Thursday, January 23, 2020||$ 62,04||$ 55,59|
|Friday, January 24, 2020||$ 60,39||$ 53,98|
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