Oil Price Drop Amid Coronavirus Outbreak

• Oil Price Drop Amid Coronavirus Outbreak

Global oil price fell this week following outbreak of a new Coronavirus in Wuhan, China, the world’s largest importer of crude oil.

Brent crude, against which Nigerian oil is priced, declined from $65.20 a barrel recorded on Monday to $59.35 on Wednesday morning during Asian trading session.

The US crude oil, West Texas Intermediate (WTI), rose from $52.91 a barrel on Monday to $53.99 on Wednesday. Suggesting that traders are projecting a better demand for WTI oil compared to Brent.

Goldman Sachs had predicted a decline of 260,000 barrels per day in global crude oil demand in 2020 if Coronavirus related issue persists.

“Supply risk has been tested in acute fashion over recent months, but the coronavirus presents the first major severe test to demand in years,” RBC analyst Michael Tran said in a note to clients Monday. “Concerns surrounding the virus and the negative impact on demand have taken the oil market hostage and have sent oil prices on a five-day losing streak.”

“The recent price plunge, due to demand concerns emanating from the coronavirus outbreak, has Saudi Arabia and Russia in full scramble mode,” Again Capital’s John Kilduff said to CNBC. “With winter in the Northern Hemisphere winding down, producers were already staring down a slack demand period, ahead of the summer driving season. It has to be concerning to them that their attempts at jaw-boning the market, over the weekend, have fallen flat,” he added.