Coronavirus affects oil prices in the market
In the Oil and Gas sector, Oil price
increased on Tuesday as investors snapped up bargains after crude benchmarks
dropped almost 4 per cent in the previous session, but fears that the spreading
coronavirus could wreak far greater economic damage than initially thought capped
gains.
Brent crude rose 29 cents, or 0.5 per
cent, to $56.59 a barrel after slipping 3.8 per cent on Monday, the largest
single-day price fall since February 3. U.S. crude futures climbed 22 cents, or
0.4 per cent to $51.65, recovering from a 3.7 per cent drop in the previous
session.
“WTI has regained some ground as
investors looked for bargains and as the (U.S.) benchmark slipped neared a key
support level of $50 per barrel,” said Satoru Yoshida, a commodity analyst with
Rakuten Securities.
Request concerns savaged prices for
oil and a whole swathe of industrial commodities on Monday while both U.S. and
European equities suffered their steepest losses since mid-2016.
“Fears that the rapidly-spreading
coronavirus outside of China could lead to a bigger-than-anticipated impact on the global economy and oil demand will likely keep weighing on market sentiment,”
Yoshida said.
The coronavirus death toll climbed to
seven in Italy on Monday and several Middle East countries were dealing with
their first infections, sending markets into a tailspin.
The coronavirus outbreak can still be
beaten, the World Health Organization, WHO,
said on Monday, insisting it was premature to declare it a pandemic even
though it had the potential to reach that level
Asian shares extended losses on
Tuesday amid fears the coronavirus was mutating into a pandemic that could
cripple global supply chains and damage economies far more than initially
expected.
Saudi Aramco expects the coronavirus
impact on oil demand to be short-lived, however, and for consumption to rise in
the second half of the year, Chief Executive Amin Nasser told Reuters on
Monday.
Above all, in the United States crude
oil inventories were seen building for the fifth straight week, while refined
products likely fell last week, a preliminary Reuters poll showed on Monday
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