Oil prices tumbled to their lowest levels in more than a year yesterday, putting them on the path of recording the largest weekly decline in more than four years, while the rapid spread of the Corona virus increased fears of a slowdown in global demand.
Investors are increasingly concerned that the outbreak may turn into a pandemic, as the virus spreads out of the epicenter in China to 46 other countries.
The most active Brent crude contracts for delivery in May fell by $ 1.37, or 2.7%, to $ 50.36 a barrel, the lowest level in 14 months. The contract term for the closest benefit for April ended later yesterday.
US West Texas Intermediate crude futures fell $ 1.33, or 2.8%, to $ 45.76 a barrel. US crude fell about 14% last week, the largest weekly decline since May 2011.
And Brent global benchmark, which fell about 2% the day before yesterday, fell about 13% last week, which puts it on the path of recording the largest weekly decline since mid-January 2016.
Oil markets hope that the Organization of Petroleum Exporting Countries (OPEC) and its allies, including Russia, will further reduce production. The group known as "OPEC +" said it would adopt a responsible approach in the wake of the outbreak of the virus.
The group, which is currently reducing production by about 1.7 million barrels per day, to support prices, is scheduled to meet in Vienna on the fifth and sixth of next March.
"We believe that a reduction of at least a million barrels per day in the second quarter is necessary in order to simply reduce the accumulation of stocks, we acknowledge that we have underestimated the damage done to demand in the past weeks," said Jason Jamil, an analyst at Jeffreys.
Saudi Arabia, which has said it will continue to communicate with Russia on oil policy in the future, is reducing supplies of crude to China in March by at least 500,000 bpd due to slowing refineries' demand.