Skip to main content

Oil prices fell more than 2% on Wednesday as a market surplus forecast by the International Energy Agency (IEA) and demand worries amid the outbreak of a virus in China outweighed concern over disruptions to Libya’s crude output.

Brent crude ended the session down $1.38, or 2.1%, at $63.21 while West Texas Intermediate fell $1.64, or 2.8%, to settle at $56.74.

The head of the IEA, Fatih Birol, said he expects the market to be in surplus by 1 million barrels per day (bpd) in the first half of this year.

Story continues below advertisement

“Oil prices remain heavy on oversupply concerns and after the Saudi Energy Minister Price Abdulaziz did not offer any hints of optimism that the OPEC+ production cuts would be extended beyond March,” said Edward Moya, senior market analyst at OANDA in New York.

“China’s coronavirus will likely see travel restrictions that could end up hurting demand for crude during a peak travel time in China.”

Markets are also focusing on the emergence from China of a new coronavirus just ahead of the Lunar New Year holidays this weekend and the possible impact a pandemic might have on global economic growth.

Deaths from the new flu-like virus in China have risen to 17 with more than 540 cases confirmed, with cases now detected as far away as the United States.

Should the virus develop dramatically and hit travel and growth, demand for oil could fall by 260,000 bpd, Goldman Sachs said in a note.

“Demand concerns over a potential epidemic will counter concerns around supply disruptions in Libya, Iran and Iraq, driving spot price volatility in coming weeks,” Goldman said, though the “impact on oil fundamentals remains limited so far.”

Oil prices have been marginally supported after Libya’s National Oil Corp on Monday declared force majeure on the loading of oil from two major oil fields after the latest development in a long-running military conflict.

Story continues below advertisement

Unless oil facilities return to operation quickly, OPEC member Libya’s crude output will be reduced to about 72,000 bpd from about 1.2 million bpd.

“The Libyan pipeline blockade continued to have a muted impact on sentiment ... There is a consensus that the disruption will prove short-lived,” said Stephen Brennock of oil broker PVM.

Meanwhile, Kazakhstan has suspended its oil exports to China after contamination was found in crude supplied by a Kazakh producer less than a year after a ‘dirty oil’ crisis broke in neighbouring Russia.

Overall though, global supplies are likely to continue to rise, with U.S. crude production in large shale deposits expected to rise to record highs in February, though the pace of increase is likely to be the lowest in about year, the U.S. Energy Information Administration (EIA) said on Tuesday.

U.S. crude inventories were likely to have fallen last week, a Reuters poll showed, but gasoline stocks are expected to have risen for an 11th week in a row.

Weekly U.S. energy reports have been delayed a day in observance of the Martin Luther King Jr. Day holiday on Monday. The American Petroleum Institute is scheduled to release its report at 4:30 p.m. on Wednesday, followed by official data at 11 a.m. on Thursday.

Report an error
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to [email protected]. If you want to write a letter to the editor, please forward to [email protected].

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to [email protected]. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to [email protected]. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies
魔域手游牛牛官方网站