Oil Prices Fall As Market Weighs Virus Impact
West Texas Intermediate (WTI) and Brent crude oil prices finished lower for the third straight trading day.
The March WTI contract lost $1.15 Thursday to settle at $55.59 per barrel. It peaked at $56.27 and bottomed out at $54.77.
March Brent ended the day at $62.04 per barrel, reflecting a $1.17 decline.
Anish Kapadia, U.K.-based oil and gas consultant and managing director with Akap Energy Ltd., told Rigzone that oil prices continued to slide Thursday as the market focused on the risk of weaker Chinese and global oil demand amid the coronavirus outbreak in China.
“This has cancelled out some of the optimism over the U.S.-China initial trade deal,” commented Kapadia.
According to Kapadia, the oil market’s weakness also reflects the unwinding of part of the Middle Eastern risk premium as tensions there subside.
“It also suggests that the market is nervous about the large amount of non-OPEC supply coming online this year outside of the U.S., with Norway and Brazil potentially producing above the highest level seen in the last few years,” he added. “As a result there has been an extremely limited reaction to the risk of Libyan supply curtailment, with the spare capacity available in the rest of OPEC.”
Campbell Faulkner, senior vice president, echoed Kapadia’s comments regarding the effect on oil prices from persistent oversupply fears and the coronavirus threat.
“Overall crude is not responding to Libyan outages and is continuing to behave in a more elastic manner than in the past,” Faulkner also noted. “Crude is currently range-bound and looks to continue, barring any meaningful change out of OPEC+ countries over the next few months.”
Reformulated gasoline (RBOB) also posted a loss Thursday. February RBOB shed two cents, settling at $1.56 per gallon.
For the second consecutive day, Henry Hub natural gas closed in positive territory. Adding two cents, February gas futures settled at $1.93.
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