Brent logs worst weekly loss in a year as China virus fears swell

It all about the coronavirus all the time, and we’re not getting signs that things are getting any better,” says analyst

NEW YORK            -            Crude prices sank more than 2% on Friday and Brent logged its biggest weekly de­cline in more than a year as concerns that a coronavirus will spread farther in China, the world’s second-largest oil consumer, curbing travel and oil demand.

The virus that has killed 26 people and infected more than 800 has prompted the suspension of public trans­port in 10 Chinese cities, while cases of infection have been found in several other Asian countries, France and the United States.

Brent crude LCOc1 settled at $60.69 a barrel, down $1.35, or 2.2%. The global benchmark fell 6.4% this week, its biggest weekly loss since Dec. 21, 2018.

U.S. crude futures CLc1 ended at $54.19 a barrel, shedding $1.4, or 2.5% on Friday and clocking a 7.4% weekly decline, their largest since July 19.

“It all about the coronavi­rus all the time, and we’re not getting signs that things are getting any better,” said Phil Flynn, an analyst at Price Fu­tures Group in Chicago.

Health authorities fear the infection rate could acceler­ate over the Lunar New Year holiday this weekend, when millions of Chinese travel.

Experience with previous outbreaks such as SARS in 2003 and MERS from 2012 suggests the economic impact of an epidemic is relatively small. However, hedge fund positioning in oil has become lopsided, with bullish posi­tions outnumbering bearish ones, leaving the market vul­nerable to any disappointing news about consumption, said John Kemp, a Reuters market analyst.

Money managers in­creased ICE Brent crude oil futures and options con­tracts by 2,828 contracts to 428,990 for the week to Jan. 21, a 15-month high, while the speculator group raised its combined U.S. crude futures and options posi­tions by 6,811 contracts to 274,347 during the period.

The latest U.S. rig count data, an indication of future supply from the world’s largest crude producer, did little to support oil prices as energy firms added oil rigs for a second consecutive week.[RIG/U]

Also the U.S. government’s latest supply report on Thursday showed gasoline stockpiles grew for an 11th consecutive week to a record high. [EIA/S]

“It’s difficult to get con­structive (about) the oil mar­ket until we see more declines in world inventory,” said Andy Lipow, president of Lipow Oil Associates in Houston.

Oil inventories in the wider industrialized world are above the five-year av­erage, according to OPEC figures, which analysts say is limiting the impact of supply losses.

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