Oil prices sunk to lowest level in seven weeks on Thursday dragged by anxiety that contagion of China’s new strain of virus may reduce fuel demand. In line, figures disclosed that United States’ oil inventories advanced last week.
The persistent and threatening Coronavirus has resulted to the death of 17 people since it was first discovered last year on Wuhan City in China. Concerns about the virus brought back the tragic Sudden Acute Respiratory Syndrome epidemic in 2002 which also originated from the country. Such heavily impacted economy and caused a slowdown in travel and tourism sector.
Brent crude LCOc1 shed 1.7%, or $1.05 to $62.16 per barrel by 0125 GMT. It previously declined to its lowest level since Dec.4 with 2.1% setback from previous activity.
U.S. West Texas Intermediate CLc1 lost 95%, or 1.7%, to $55.78 per barrel after its worst inactivity starting Dec. 3. The contract shed 2.7% on Wednesday.
Recently recorded cases bloated up to 540 as authorities conducted transportation shutdown to prevent further spread of the virus. Families were also encouraged to not leave to minimize dangers of acquiring the disease.
“We estimate a price shock of up to $5 (a barrel) if the crisis develops into a SARS style epidemic based on historical oil price movements,” JPM Commodities Research said in a statement.