Oil futures: RBOB plunges as coronavirus travel restrictions dim demand outlooks

New York — RBOB futures led the oil complex sharply lower Sunday as coronavirus isolation efforts weighed on travel demand.

At 2234 GMT NYMEX April RBOB was down 7.21 cents at $82.71 cents/gal, having fallen as low as 81.87 cents/gal, and April ULSD was 4.20 cents lower at $1.0954/gal.

Demand outlooks dimmed over the weekend amid the continued spread of the coronavirus across the US and Europe. France and Spain announced over the weekend that they would follow Italy in enforcing sweeping quarantine and travel restrictions. On Friday the US announced it would ban visitors from most of Continental Europe, and on Saturday added the UK and Ireland to the list.

Major cities across the US, in a bid to prevent the further spread of the virus, have canceled major events, banned large gatherings, and are pushing citizens to remain at home as much as possible in the coming weeks.

ICE May Brent was down $1.43 at $32.42/b at 2234 GMT, and NYMEX April WTI was $1.13 lower at $30.60/b.

The US Federal Reserve's Federal Open Market Committee announced late Sunday that it would slash its target interest rate 1 percentage point to 0.0-0.25%, from the current 1.00-1.25%, and launch a $700 billion quantitative easing program.

"The effects of the coronavirus will weigh on economic activity in the near term and pose risks to the economic outlook," the Fed said in a statement.

The Fed move comes on the heels of a 50 basis point interest rate cut earlier this month.

Oil futures had initially opened higher Sunday evening after surging in aftermarket trading Friday following US President Donald Trump's announcement that the US would buy "large quantities" of crude to fill the Strategic Petroleum Reserve.

On Sunday evening, April WTI opened at $33.75/b, up $2.02/b from Friday's settle, while May Brent was up 85 cents from Friday at $35.82/b.

Both contracts moved lower, however, following refined products futures, and as US equity futures pointed to a sharply lower open Monday morning.

As of Friday, the SPR had the capacity to store up to 77 million additional barrels of crude oil, according to a Department of Energy official. At current oil prices, that could mean the US may buy roughly $2.6 billion worth of crude.

Trump added that the SPR move was also designed to help the US oil industry, which has been hit by the double-whammy of demand destruction from the coronavirus pandemic and surging supply after the breakup of the OPEC+ agreement between Saudi Arabia and Russia.

The US Fed actions come on the heels of the UAE and Saudi Arabia on Saturday revealing $40.6 billion of stimulus packages aimed at supporting their economies, which have also been hit hard by the coronavirus outbreak and the oil price crash.

The UAE's central bank announced a package of Dirhams 100 billion ($27.3 billion) that will allow banks to provide relief to private sector companies. Saudi Arabia's central bank announced a Riyals 50 billion ($13.3 billion) package to prop up the private sector.