Oil falls by about 2% and falls to its lowest level in more than a month, with increasing fears of a Chinese virus outbreak
Economy News _ Baghdad
Oil prices fell more than 2% on Wednesday as the International Energy Agency forecasts for market supply and demand fears amid a virus outbreak in China overshadowed concerns over disruptions in crude production in Libya.
Brent crude ended the session down $ 1.38, or 2.1 percent, to $ 63.21 a barrel, while West Texas Intermediate crude fell $ 1.64, or 2.8 percent, to set the settlement price at $ 56.74.
Fatih Birol, director of the International Energy Agency, said he expected a glut of one million barrels per day in the market in the first half of this year.
"Oil prices remain heavy due to concerns about oversupply and after Saudi Energy Minister Prince Abdulaziz declined to provide any signs of optimism that OPEC + production cuts will be extended beyond March," said Edward Moya, chief market analyst at Oanda in New York.
"The coronavirus in China is likely to lead to travel restrictions that could ultimately harm demand for crude during the height of the flight season in China."
Markets are focusing on the emergence of a new coronavirus in China ahead of the Lunar New Year holidays early next week and the potential impact of the epidemic on global economic growth.
Deaths due to the new virus increased to 17, with more than 540 cases confirmed, some as far away as the United States.
Goldman Sachs said that if there is a dramatic development in the virus that affects travel and growth, then the demand for oil may drop by 260 thousand barrels per day.
Goldman said, "Fears of demand arising from a possible epidemic will collide with fears of supply disruptions in Libya, Iran and Iraq, which will lead to fluctuations in the spot price in the coming weeks," but "the impact on the fundamentals of oil remains limited until now."
Oil prices were not significantly supported after the National Oil Corporation of Libya announced on Monday the state of force majeure in crude loading from two main fields following the recent developments in the long-running military conflict there.
Unless the oil facilities return to work quickly, the production of OPEC member Libya may decrease to about 72 thousand barrels per day from about 1.2 million barrels per day.