Crude futures extend downtrend as coronavirus fears grip markets

Singapore — 0306 GMT: Crude oil futures continued to trend lower in mid-morning trade in Asia Tuesday, amid concerns that the growing spread in the coronavirus will have a negative impact on global economic growth and demand.

At 11:06 am Singapore time (0306 GMT), March ICE Brent crude futures fell 36 cents/b (0.61%) from Monday's settle at $58.96/b, while the NYMEX March light sweet crude contract fell 29 cents/b (0.55%) at $52.85/b.

The downtrend extended into Tuesday's Asian session, after March ICE Brent futures settled at a three-month low Monday.

"Brent closed below $60/b for the first time in three months yesterday, as growing fears over the spread of the coronavirus grips global markets," OCBC analysts said Tuesday.

The coronavirus death toll in China has grown to more than 100, according to media reports Tuesday morning. The national Lunar New Year holidays in China has also been extended by three days to Sunday in an effort to contain the spread.

"Going forward, the question would be how severe the implications of the virus would be for markets," IG's market strategist Pan Jingyi said.

"The rise in US supply coupled with the potential dent of the coronavirus on demand and production, particularly for China, which is the world's number 2 consumer, had underpinned this uncomfortable drop in prices for OPEC and Co," Pan added.

Sentiment is likely to remain bearish for now despite indications of supply constraints from Libya, analysts said.

Libya's production is poised to fall to "72,000 b/d very soon" if the blockade led by the self-styled Libyan National Army continues, the chairman of its state oil company said Monday, Platts reported previously.

Libya was producing more than 1.1 million b/d before January 18 when the LNA suspended oil exports from key oil terminals and also shut in its main oil fields.

As of 0306 GMT, the US Dollar Index was down 0.01% at 97.755.

--Jeslyn Lerh, jeslyn.lerh@spglobal.com

--Edited by Norazlina Juma'at, norazlina.jumaat@spglobal.com