Crude oil prices fell to their lowest point in more than a year amid growing concerns that the coronavirus outbreak is weighing on the global economy and quickly sapping demand for fuel.
West Texas intermediate oil slumped to US$49.91 a barrel early Monday, the first drop below US$50 since January, 2019, and down sharply from levels above US$60 early this year. Prices for Brent crude, the international benchmark, have also fallen.
Demand for crude oil has quickly dropped as refineries in China curtail production to reflect lower requirements for fuel in the country. A broad shutdown of economic activity and travel in areas affected by the coronavirus outbreak means tens of millions of citizens are staying in their homes in a bid to slow the spread of the virus.
Refiner Sinopec Corp. told its facilities to slash throughput this month by about 600,000 barrels a day, or 12 per cent, the steepest cut in more than a decade. Independent refineries in Shandong province, which collectively import about a fifth of China’s crude, cut output by 30 per cent to 50 per cent in a little more than a week, executives and analysts said.
Uncertainty about the continuing impact from the virus has oil traders “selling first and asking questions later,” said Michael Tran, commodity strategist with Royal Bank of Canada Capital Markets.
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