Oil prices fell for a sixth straight session on Friday and were on track for about a 12% weekly fall, the biggest in more than four years, as the spread of the coronavirus outside China raised fears of slowing global demand.
The virus, which has killed more than 2,700 people in China, has been found in another 46 countries and caused 57 deaths. Investors worry the epidemic could turn into a pandemic and deliver a damaging blow to the global economy.
West Texas Intermediate (WTI) crude futures fell $1.12, or 2.5%, to $45.19 per barrel. U.S. crude has fallen about 13% for the week, the biggest weekly decline since November 2014.
The most active Brent crude contract for May was down $1.36, or 2.6%, at $50.10 a barrel, a 14-month low. The front-month April contract expires today.
The international benchmark, which fell about 2% on Thursday, has shed around 12% this week and is on track for its steepest weekly decline since mid-January 2016.
With new infections reported around the world now surpassing those in mainland China, the World Health Organization said on Thursday that all countries need to prepare to combat the coronavirus.
“Oil prices are moving tangentially to news flows around the deluge of secondary cluster outbreaks,” said Stephen Innes, chief market strategist at AxiCorp.
“And for the oil market, none more so worrying than those reports emanating from the U.S. market, which is the biggest consumer of oil on the planet by a long shot.”
U.S. health officials urged Americans to begin preparing for the spread of coronavirus in the United States earlier this week.
The oil market is hoping for steeper supply cuts by the Organization of the Petroleum Exporting Countries (OPEC) and its allies including Russia, who have said they will take a responsible approach in the wake of the virus outbreak.
The producer group known as OPEC+, which is currently reducing output by roughly 1.2 million barrels per day to support prices, is set to meet in Vienna on March 5-6.
“We now believe the group needs to make much steeper cuts than the 600,000 barrels per day (bpd) recommendation from their technical committee to support prices,” Jefferies analyst Jason Gammel said.
“At least a 1 million bpd cut for the second quarter strikes us as necessary to merely moderate inventory builds, and we confess to underestimating demand destruction over the last several weeks.”