Reuters: Oil drops below $60 as China virus drives demand concern

14:55, 27 January 2020
Economy
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REUTERS

Brent crude LCOc1 fell by $1.79 a barrel, or 2.95%, to $58.90 by 0903 GMT, its lowest since late October, Reuters said.

Oil prices last fell below $60 on November 1.

U.S. crude CLc1 was down by $1.63, or 3%, at $52.55.

Global stock exchanges also fell as investors grew increasingly anxious about the widening crisis. Demand spiked for safe-haven assets, such as the Japanese yen and Treasury notes.

Read alsoDeath toll from coronavirus outbreak in China rises to 81 – media

Saudi Arabia's Energy Minister Prince Abdulaziz bin Salman Al-Saud said on Monday that OPEC and allied global producers led by Russia can help to balance the oil markets in response to any demand changes.

He also said the Kingdom, the de-facto leader of the Organization of the Petroleum Exporting Countries (OPEC), was watching developments in China and that he felt confident the new virus would be contained.

Markets are being "primarily driven by psychological factors and extremely negative expectations adopted by some market participants despite (the virus') very limited impact on global oil demand," the minister said.

Prince Abdulaziz added that the outbreak of the SARS virus in 2002-2003 did not lead to a significant reduction in oil demand.

OPEC and its allies, known as OPEC+, have been withholding supply to support oil prices for nearly three years and on Jan. 1 increased their agreed output reduction by 500,000 barrels per day (bpd) to 1.7 million bpd through March.

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