Despite an escalation brought by Libya’s oilfields blockage on Monday, oil prices fell on Tuesday as a deadly virus in China sparked fears of an economic slowdown.
Prices had appreciated on Monday when supporters of military commander, Khalifa Haftar, closed a pipeline connecting Libya’s largest oilfields which led to a stop in oil production.
As at Tuesday night, the Brent crude was trading down by 66 cents or 1.01 percent to trade at $64.54 per barrel, while the US West Texas Intermediate crude shed 29 cents or 0.5 percent to settle at $58.29 per barrel.
China’s National Health Commission on Monday confirmed cases of the SARS-like coronavirus spreading between humans, which has already killed six people and infected over 300 people.
This also affected global stocks which were down on Tuesday, with Asian markets posting the biggest drops due to the mounting concern over the rapid spread of the deadly virus in China.
The substantial oil supply disruptions in Libya couldn’t keep prices up as the new virus threatens to upset the global market as panic held the market with performance lower in some countries.
Some analysts said while it’s still early, the virus does not seem to be as lethal as SARS, which killed about 10 percent of patients. Reports show that Chinese authorities on Monday said that the virus was now being transmitted between humans, creating more concern of a mass epidemic.
The coronavirus infection can create respiratory problems, coughing, fever and in more severe cases pneumonia, or acute respiratory syndrome and death.
Looking ahead, if the threat posed by this new virus subsides, oil prices can do better even as the International Monetary Fund (IMF) cut back its 2020 global economic growth forecasts by a tenth of a percentage point to 3.3 percent because of sharper than expected slowdowns in India and other emerging markets.
However, the IMF said that the US-China trade deal signed on January 15 was another pointer that trade and manufacturing activity could do better. The bank maintained its 2020 forecasts for Brent and West Texas Intermediate (WTI) prices at $62 and $57 a barrel respectively.