Crude futures fall as growing coronavirus concerns cloud demand

Singapore — Crude oil futures fell in midmorning trade in Asia Monday as growing concerns about the coronavirus outbreak continued to cloud global oil demand outlook.

At 9:30 am Singapore time (0130 GMT), April ICE Brent crude futures fell 27 cents/b (0.50%) from Friday's settle at $54.20/b, while the NYMEX March light sweet crude contract fell 33 cents/b (0.66%) at $49.99/b.

"Crude oil prices fell as investors reassessed the impact of the [corona]virus on demand...the market also sees little supporting coming from OPEC," said ANZ analysts in a note Monday.

Discussions by OPEC+, a coalition of OPEC and other oil producers, of a potential additional 600,000 b/d supply cut failed to uplift oil prices as Russia remained uncommitted.

"And if the cartel fails to reach an agreement, there will be more pain to come in oil downside," said Stephen Innes, chief market strategist at AxiCorp.

With no imminent action pending, OPEC+ ministers have kept their March 5-6 meeting in Vienna as scheduled for now, instead of moving it forward.

"The demand devastation of gigantic proportions like what's happening in China could set the stage for a shift in oil prices towards those critical break evens before relief sets in," Innes added.

Crude prices have tumbled over the past weeks amid concerns of the coronavirus outbreak dampening global oil demand.

"Markets remain nervy about the impact on commodity prices as well as broader risk appetite this week after the false dawn early last week," said Vishnu Varathan, Mizuho Bank's senior economist.

"Clearly the pullback in safe-haven demand early last week has probably hit a wall, and may be thrown into reverse if numbers of cases and deaths outside of China climb," he added.

As of Monday morning, the coronavirus death toll in China has surpassed 900, exceeding the toll from the SARS epidemic of 2002-2003, media reports showed.

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

--Edited by Manish Parashar, manishparashar@spglobal.com