Oil prices drop for third day, US crude hits 17-year low

LONDON: Oil prices fell for a third session yesterday 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 US$1.49 , or 5.53%, at US$25.46 (RM111) per barrel by 1006 GMT, having earlier fallen to US$25.08, its lowest since late April 2003.

Brent crude was trading down 84 cents, or around 3%, at US$27.89 (RM121.6) a barrel, after dropping to US$27.56, its lowest since early 2016.

“The oil demand collapse from the spreading coronavirus looks increasingly sharp,” Goldman Sachs said in a note forecasting a fall in the price of Brent to as low as US$20 in the second quarter, a level not seen since early 2002.

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 economies, the world’s richest 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-onyear 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 consultants expect demand in April to fall by 11 million bpd compared with 2019.

The impact on demand is starting to show in official statistics with Japan's trade bureau saying on Wednesday that crude imports into the world’s third-biggest economy in February were down 9% from a year earlier. – Reuters