Bloomberg | Jan 24, 2020 16:43
(Bloomberg) -- Oil headed for its worst weekly slump in more than a year amid fears that China’s coronavirus will cripple fuel demand just as markets struggle with a fragile world economy and adequate supplies.
Futures sank as much as 2.9% in London to approach $60 a barrel for the first time since November as deaths from the coronavirus rose to 25 and China expanded travel restrictions for over 40 million people in an attempt to halt contagion. The U.S. is monitoring more than 60 people for potential infection, and lawmakers said health authorities are expected to confirm a third case.
The Asian virus has spooked traders even as the World Health Organization stopped short of declaring a global health emergency. The contagion is disrupting travel during the Lunar New Year holiday, when hundreds of millions normally fly or ride home. The selloff has accelerated as trend-following funds turned bearish, according to TD Securities.
“Contagion fears are spiking ahead of the biggest yearly migration ahead of new year,” says Daniel Ghali, a commodities strategist at TD Securities. “The fear factor is the risk of contagion, synonymous to what happened in 2003 with SARS which led to a 2% drop in Chinese economic growth.”
The fast-spreading virus is the latest challenge for a market that’s been buffeted this year by geopolitical turmoil in the Middle East and North Africa, as well as the phase-one trade deal between Beijing and Washington. Goldman Sachs Group Inc (NYSE:GS). said earlier this week that, if the coronavirus has an impact similar to the 2003 SARS epidemic, demand could be curbed by 260,000 barrels a day.
See also: China’s Economy Was Brightening This Month Before Virus Fear Hit
Brent crude for March settlement fell $1.54 to $60.50 a barrel on the ICE (NYSE:ICE) Futures Europe exchange as of 1:05 p.m. in New York. Futures were on track for a weekly loss of 6.7%, the biggest since Dec. 21, 2018.
West Texas Intermediate futures for March delivery slipped $1.37 to $54.22 a barrel on the New York Mercantile Exchange. Options traders are paying the most since Oct. 31 for protection against price swings, according to the CBOE/CME WTI volatility index.
Written By: Bloomberg
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.