Oil Prices Slump on Monday as Coronavirus Spreads

• Oil Prices Slump on Monday as Coronavirus Spreads

Crude oil prices fell on Monday as global investors and businesses fear the rising number of coronavirus victims outside China could hurt global economy more than previously projected.

Brent crude oil, against which Nigerian crude oil is priced, declined from $58.35 per barrel it closed on Friday to $55.66 a barrel on Monday before pulling back slightly to $55.88.

While the U.S West Texas Intermediate (WTI) crude oil dropped from $53.31 a barrel to $50.72 per barrel.

According to a report published in the New York times today, coronavirus has infected hundreds in South Korea while Italy is working round the clock to contain the rising number of infected people that rose from 152 to 219 people over the weekend. At least five people are reportedly dead.

Similarly, 12 people have been infected in Iran, according to a government statement.

The rising number of infected people and affected regions has raised global risk as investors and businesses fear the damage won’t be limited to just China as previously projected but across key global economies. This, experts said could have a significant effect on growth in 2020 and slow down commodity demand, especially crude oil.

“Demand destruction for crude is likely to intensify as travel restrictions will likely increase as the coronavirus outbreak becomes a global threat and not just contained to China,” said Edward Moya, senior market analyst at OANDA.

“Oil prices will remain vulnerable here as energy traders were not pricing in the coronavirus becoming a pandemic.

“While some parts of China are seeing improving statistics with the coronavirus, financial markets will remain on edge until we start seeing the situation improve in Iran, Italy, South Korea and Japan.”