Oil prices fall again, on track for biggest weekly drop in over 4 years

By Koustav Samanta
SINGAPORE, Feb 28 (Reuters) - Oil prices fell for a sixth
straight session on Friday and were on track for about a 12%
weekly fall, the biggest in more than four years, as the spread
of the coronavirus outside China raised fears of slowing global
demand.
The virus, which has killed more than 2,700 people in China,
has been found in another 46 countries and caused 57 deaths.
Investors worry the epidemic could turn into a pandemic and
deliver a damaging blow to the global economy. The most active Brent crude contract for May LCOc2 was
down 90 cents, or 1.7%, at $50.83 a barrel by 0141 GMT, a
14-month low. The front-month April contract expires today.
The international benchmark, which fell about 2% on
Thursday, has shed around 12% this week and is on track for its
steepest weekly decline since mid-January 2016.
West Texas Intermediate (WTI) crude futures CLc1 fell 73
cents, or 1.6%, to $56.36 per barrel. U.S. crude has fallen
about 13% for the week, the biggest weekly decline since
November 2014.
With new infections reported around the world now surpassing
those in mainland China, the World Health Organization said on
Thursday that all countries need to prepare to combat the
coronavirus.
"Oil prices are moving tangentially to news flows around the
deluge of secondary cluster outbreaks," said Stephen Innes,
chief market strategist at AxiCorp.
"And for the oil market, none more so worrying than those
reports emanating from the U.S. market, which is the biggest
consumer of oil on the planet by a long shot."
U.S. health officials urged Americans to begin preparing for
the spread of coronavirus in the United States earlier this
week. The oil market is hoping for steeper supply cuts by the
Organization of the Petroleum Exporting Countries (OPEC) and its
allies including Russia, who have said they will take a
responsible approach in the wake of the virus outbreak.
The producer group known as OPEC+, which is currently
reducing output by roughly 1.2 million barrels per day to
support prices, is set to meet in Vienna on March 5-6.
"We now believe the group needs to make much steeper cuts
than the 600,000 barrels per day (bpd) recommendation from their
technical committee to support prices," Jefferies analyst Jason
Gammel said.
"At least a 1 million bpd cut for the second quarter strikes
us as necessary to merely moderate inventory builds, and we
confess to underestimating demand destruction over the last
several weeks."