Crude tumbles to 17- year low as lockdowns spread
VIRUS IMPACT Crude was trading at $27.89, after hitting its lowest since 2016
LONDON: Oil prices fell for a third session on Wednesday with US crude futures tumbling to a 17-year low as travel and social lockdowns sparked by the coronavirus epidemic knocked the outlook for demand.
US crude was down $1.49 cents, or 5.53%, at $25.46 per barrel by 10:06 GMT, having earlier fallen to $25.08, its lowest since late April 2003. Brent crude was t r a d i ng d o wn 8 4 c e nt s , o r around 3%, at $27.89 a barrel, after dropping to $27.56, its lowest since early 2016.
“The oil demand collapse from the spreading coronavirus l ooks i ncreasingly sharp,” Goldman Sachs said in a note on Wednesday, f orecast i ng a decline in the price of Brent to as low as $20 in the second quarter, a level that has not been seen s i nce early 2 0 0 2 . The bank expects a demand contraction of 8 million barrels per day (bpd) by late March and an annual decline in 2020 of 1.1 million bpd, which it said would be the biggest on record.
In efforts to support economie s , t h e worl d ’ s r i c h e s t nations prepared to unleash trillions of dollars of spending to lessen the fallout from the coronavirus outbreak, as well as imposing social restrictions not seen since World War Two.
Rystad Energy projects a year-on-year decrease of 2.8% or a fall of 2.8 million bpd in global oil demand this year. “To put the number into context, last week we projected a decrease of just 600,000 barrels,” Rystad said.
The c o ns ul t a nt s e x p e c t demand in April to fall by 11 million bpd compared with 2019.
The impact on demand is starting to show in official stat i s t i c s wit h Japan’s t r a de bureau saying on Wednesday that crude imports into the world’s third-biggest economy in February were down 9% from a year earlier.
Virgin Australia became the latest airline to shut down its international network with the s uspension of al l overseas flights, while Australian Prime Mini s t e r S c o t t Morr i s o n warned that the situation could last six months or more.
Elsewhere, Iraq’s oil minister pleaded for an emergency meeting between members of the Organization of the Petroleum Exporting Countries (Opec) and non-opec producers to discuss immediate action to support the market.
LONDON: With the dollar more integrated into the world economy, its gains are an added stress for businesses as they brace for soaring costs on their dollar debt.
Investors are f l eeing emerging markets in record numbers and piling into the safe-haven greenback., , with two emergency interest-rate cuts this month by the Federal Reserve doing nothing to diminish the dollar’s appeal. Turkey’s central bank was the latest emerging market to make an emergency rate cut.
Meanwhile, Sterling tanked against the dollar, hitting its lowest level since 1985 as investors snapped up the safe haven US currency in markets panicked by the coronavirus outbreak.
The pound slid about 1.9% to $1.1828 according to Bloomberg data. It later stood at $1.1861.
“Sterling has completed one of its steepest declines in memory by hitting its weakest level since 1985, excluding... the brief dive of the October 2016 flash crash,” said Markets.com analyst Neil Wilson. BLOOMBERG