Coronavirus Fears Continue to Weigh on Crude
24 January 2020 - 05:31PM
Dow Jones News
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)
Copyright (c) 2020 Dow Jones & Company, Inc.