Crude oil futures dive as COVID-19 cases outside China climb

0235 GMT: April NYMEX and ICE Brent crude futures were substantially lower in mid morning trade in Asia Monday, having recovered slightly from the more than 3% dive at the open, as the rise in COVID-19 cases outside China threatens global demand.

At 10:35 am Singapore time (0235 GMT), April ICE Brent crude futures fell $1.67/b (2.85%) from Friday's settle at $56.83/b, while the NYMEX April light sweet crude contract fell $1.42/b (2.66%) at $51.96/b.

Concerns over slower economic growth crept in amid a surge in COVID-19 cases outside China, including in South Korea, Japan and Italy, analysts highlighted.

"The non-linear trajectory in which the coronavirus case development seems to be moving once again spells of the uncertainty with this highly contagious virus, one to weigh on market sentiment going into the fresh week," IG's market strategist Pan Jingyi said Monday morning.

Crude futures had settled lower Friday, after an eight-day rally, as the growing coronavirus spread outside China renewed demand concerns.

South Korea raised its infectious-disease alert to its highest level, while the number of cases elsewhere in Japan and Italy had also risen, according to media reports.

In addition, the lack of an update on proposed production cuts from OPEC+ did little to lift sentiment, with Russia still uncommitted, analysts said.

"OPEC remains on the sidelines, resisting calls to cut output. It will meet as scheduled in March, despite calls from various members to arrest the price slide immediately," ANZ analysts said.

"We should not underestimate the economic disruption as a super spreader could trigger a massive drop in business activity around the globe of proportions the world has never dealt with before," AxiCorp's chief market strategist Stephen Innes said.

"So far, backwardation in Brent has held up, but this week we could be whistling a different tune," Innes added.