EghtesadOnline: Crude prices extended declines on Monday, dropping below $60 for the first time in nearly three months as the death toll from China’s coronavirus rose and more businesses were forced to shut down, stoking expectations of slowing oil demand.
Brent crude fell by $1.79 a barrel, or 2.95%, to $58.90, its lowest since late October. Oil prices last fell below $60 on November 1. US crude was down by $1.63, or 3%, at $52.55, Reuters reported.
Global stock exchanges also fell as investors grew increasingly anxious about the widening crisis. Demand spiked for safe-haven assets, such as the Japanese yen and Treasury notes, according to Financial Tribune.
Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman Al-Saud said on Monday that OPEC and allied global producers led by Russia can help to balance the oil markets in response to any demand changes.
He also said the Kingdom, the de-facto leader of the Organization of the Petroleum Exporting Countries, was watching developments in China and that he felt confident the new virus would be contained.
Markets are being “primarily driven by psychological factors and extremely negative expectations adopted by some market participants despite (the virus’) very limited impact on global oil demand,” the minister said.
Prince Abdulaziz added that the outbreak of the SARS virus in 2002-2003 did not lead to a significant reduction in oil demand.
OPEC and its allies, known as OPEC+, have been withholding supply to support oil prices for nearly three years and on Jan. 1 increased their agreed output reduction by 500,000 barrels per day to 1.7 million bpd through March.