Crude oil futures slide as the coronavirus spreads worsens globally

0235 GMT: Crude oil futures were lower in mid-morning trade in Asia Monday as the growing coronavirus spread continues to dampen the outlook for demand and economic growth.

At 10:35 am Singapore time (0235 GMT), ICE Brent May crude futures were down $1.07/b (3.2%) from Friday's settle at $32.78/b, while the NYMEX April light sweet crude contract was 64 cents/b (2%) lower at $31.09/b.

The growing spread of the coronavirus globally has led to further travel restrictions. More airlines have also announced job cuts and grounding aircraft in response to the worsening pandemic, according to media reports.

"The escalating coronavirus pandemic, with countries around the world closing borders and locking down populations to contain its spread, has seen Friday's false dawn end quickly today," Jeffrey Halley, Senior Market Analyst at OANDA, said Monday.

Oil futures had 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. The gains, however, were short-lived.

"With the nightmare scenario of an oil price war and a global recession upon us, oil has collapsed in early Asian trading," Halley said.

RBOB futures had led the oil complex sharply lower on Sunday as the coronavirus isolation efforts weighed on travel demand. At 0235 GMT during the Asian morning trade, NYMEX April RBOB stood at 82.29 cents/gal, 8.5% lower from Friday's 89.92 cents/gal settlement. The April ULSD was 4% lower at $1.0899/gal during mid-morning trade in Asia, having settled at $1.1374/gal last Friday.

The US Federal Reserve's Federal Open Market Committee also announced late Sunday that it would slash its target interest rate one percentage point to 0.0-0.25%, from the current 1.00-1.25%. Nonetheless, this failed to uplift investor confidence when Asia trading opened.

"The emergency rate cut is largely viewed as a act of no confidence by the US central bank despite its intended consequences to boost economic activity and is likely to drag oil prices down today," OCBC analysts said.

"For the week ahead, we expect volatility to continue in the markets, with the worsening coronavirus outbreak in Europe and the US to remain as a concern among investors," the analysts added.

France and Spain announced over the weekend that they would follow Italy in enforcing sweeping quarantine and travel restrictions.

Concerns of growing oil supply following the collapse of the OPEC+ talks also capped market optimism, with Russia and Saudi Arabia indicating that they will increase production following the expiry of the current OPEC+ deal.