Oil retains downtrend as demand worsens amid COVID-19

Crude oil futures remained lower in mid-morning trade in Asia Friday as indications of worsening demand emerged amid the growing COVID-19 spread outside China.

At 11:01 am in Singapore (0301 GMT), April ICE Brent crude futures fell 79 cents/b (1.51%) from Thursday's settle to $51.39/b, while the NYMEX April light sweet crude contract was 76 cents/b (1.61%) lower at $46.33/b.

Crude slid for a fifth-straight session Thursday to settle at 14-month lows amid a continued focus on the economic impact of the coronavirus outbreak.

"Saudi Arabia is reducing its crude supplies to China by about 500,000 b/d in March to around 1.3–1.5 million b/d, as demand from refineries remains weak," ANZ analysts said Friday.

A number of refineries in China are either undergoing maintenance or cutting runs, partly to offset stock pressure after product demand slumped due to the coronavirus outbreak, S&P Global Platts reported.

"And for the oil market, none more so worrying than those reports emanating from the US market, which is the biggest consumer of oil on the planet by a long shot," AxiCorp's chief market strategist Stephen Innes said Friday.

California governor Gavin Newsom said Thursday that the state is monitoring 8,400 people for potential exposure to the virus.

US equity markets traded sharply lower Thursday as investors weighed the economic impact of the coronavirus outbreak.

"The energy market is not spared from the global selloff in risky assets this week, and the rapid selloff globally suggests that the downside across global risky assets may continue in the near term," OCBC analysts said Friday.

Platts Analytics slashed its forecast for 2020 demand growth by 470,000 b/d to 860,000 b/d in its latest monthly report released last week.