Brent ends on a decline of 1.38 dollars, to 63.21 dollars, and the WTI ends on a loss of 1.64 dollars, to 56.74 dollars.
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Oil prices fell sharply on Wednesday, dropping to their lowest level since early December as the spread of a deadly virus raised fears for demand for black gold as supply continues to swell.
In London, a barrel of Brent North Sea crude for March delivery dropped 1.38 dollars, or 2.1%, to finish at 63.21 dollars.
In New York, WTI’s US barrel for March, which is the first day of use as a benchmark contract, lost 1.64 dollars, or 2.8%, to close at 56.74 dollars.
“The market is trying to assess the potential to destroy demand for oil if fears about the spread of the virus increase,” said Phil Flynn of Price Futures Group.
After the SARS epidemic in 2002-2003, which killed 774 people worldwide, “” we saw a significant drop in demand for oil, “he recalls, stressing in particular that air transport had experienced a hollow.
However, the expert also stresses, “unlike 2003, China is sharing information, thus giving hope that world health organizations will be able to anticipate the spread of the virus.”
At the same time, however, there are increasing signs of an increase in the supply of black gold worldwide.
The US Energy Information Agency (EIA) said on Tuesday that shale oil production in the United States is expected to climb to a new record high, 9.2 million barrels per day in February. “For comparison”, three years ago it was 5.3 million, recalls Eugen Weinberg of Commerzbank.
The monthly increase in shale oil production, however, is the smallest in a year, reflecting a certain slowdown, tempers the specialist.
Market participants will monitor the EIA’s weekly report on petroleum product stocks in the United States on Thursday, released a day later than usual due to a US holiday on Monday.
In addition, according to press reports, the Brazilian Minister of Mines and Energy Bento Albuquerque predicted on Wednesday that his country would produce 3.5 million barrels per day (mbd) in 2020 against 3.1 mbd in 2019.
This level of production would be “a historic high,” notes AFP Neil Wilson of Markets.com.
Such an increase, combined with that of the United States or even Norway, “cuts off any possibility of reaction on the part of the member countries of OPEC + (Organization of the Petroleum Exporting Countries and its Allies, editor’s note) lose market share, ”he adds.
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