NEW YORK (Reuters) – Oil prices fell almost 1% on Tuesday, pressured by concerns over the impact on crude demand from the coronavirus outbreak in China and a lack of further action by OPEC and its allies to support the market.
FILE PHOTO: Pump jacks operate in front of a drilling rig in an oil field in Midland, Texas U.S. August 22, 2018. REUTERS/Nick Oxford
Brent crude LCOc1 was down 44 cents, or 0.8%, to $57.23 a barrel by 11:00 a.m. EST. U.S. West Texas Intermediate (WTI) crude CLc1 futures fell 39 cents, or 0.8%, to $51.66 a barrel.
Though new cases of the coronavirus in mainland China have dipped, global experts said it was too early to judge if the outbreak is being contained. Forecasters including the International Energy Agency (IEA) have cut 2020 oil demand estimates because of the virus.
“While the coronavirus remains as a latent bearish consideration capable of sharply reducing Chinese oil demand, estimates as to the extent of demand deterioration still vary widely with any definition still weeks if not months away,” Jim Ritterbusch, president of Ritterbusch and Associates, said in a note.
The virus is having a wider impact on financial markets. Asian shares fell, while Wall Street also was retreating after Apple Inc (AAPL.O) said it would miss quarterly revenue guidance due to slower iPhone production and weakened demand in China.
The IEA last week said first-quarter oil demand was likely to fall by 435,000 barrels per day (bpd) from a year ago.
The Organization of the Petroleum Exporting Countries (OPEC) and allied producers including Russia have been considering further production cuts to support prices.
The group, known as OPEC+, has a pact to cut oil output by 1.7 million bpd until the end of March.
OPEC+ oil ministers will meet in Vienna on March 6 as initially planned, a senior Russian energy ministry official said on Tuesday. The group will consider an advisory panel’s recommendation to cut supply by a further 600,000 bpd.
OPEC has been trying to persuade Russia on the deeper cuts, and Moscow has said it will disclose its stance in the coming days.
“Risk aversion has returned to the markets,” said Commerzbank analyst Carsten Fritsch. “OPEC+ has shown no sign yet of reacting to the virus-related slump in demand by making additional production cuts.”
Supporting prices, oil output in Libya has collapsed since Jan. 18 because of a blockade of ports and oilfields.
Elsewhere, Saudi Arabia’s crude stockpiles fell by 11.8 million barrels in December, despite steady shipments by the world’s biggest oil exporter, official data showed on Tuesday.
Additional reporting by Alex Lawler in London and Jessica Jaganathan in Singapore; Editing by Barbara Lewis, David Goodman and David Gregorio