By Sarah Toy 

U.S. crude prices were on track for their worst week since July, weighed down by fears that a deadly new virus spreading throughout China and other countries will hurt demand.

U.S. crude futures fell 2.3% to $54.29 a barrel in Friday morning trading, while Brent, the global gauge of prices, declined 2.2% to $60.65 a barrel.

Crude prices were hit this week after reports of the emergence of a deadly new respiratory virus in the central Chinese city of Wuhan that has killed at least 26 people and sickened hundreds. The second U.S. case was confirmed by health officials on Friday

The virus is already denting oil demand, wrote Phil Flynn, senior market analyst at the Price Futures Group, in a note. He pointed to Beijing's lockdown of Wuhan and nearby cities during a time when many families would be traveling for Lunar New Year festivities.

"Many of the Lunar Day festivities have been canceled along with flights due to airport closures and trains shutting down," he said. "That will eventually add up to hundreds of thousands of unused barrels of jet fuel, diesel and gasoline."

News of the virus largely overshadowed Thursday's report from the Energy Information Administration. U.S. crude inventories fell by 400,000 barrels last week, according to the EIA, more than the 300,000-barrel drop that analysts and traders surveyed by The Wall Street Journal had expected.

"The bullish EIA Report on Thursday was run over by demand concerns surrounding coronavirus," wrote Robert Yawger, director of the futures division at Mizuho Securities USA, in a note.

Elsewhere in commodities, the price of natural gas fell 1.3% to $1.901 per million British thermal units. Natural-gas futures hit multiyear lows this week, driven down by a supply glut and persistent warmer-than-usual winter weather across the U.S. that has tamped down demand.

Natural-gas stockpiles fell by 92 billion cubic feet last week, according to the EIA. Analysts and traders surveyed by The Wall Street Journal had been expecting an 88-billion cubic foot withdrawal, though total inventories are still around 9% higher than the five-year average.

Write to Sarah Toy at sarah.toy@wsj.com

 

(END) Dow Jones Newswires

January 24, 2020 12:16 ET (17:16 GMT)

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