Oil prices fell on the fears of Coronavirus outbreak

 Oil prices fell on the fears of Coronavirus outbreak

The oil prices fell slightly on the fears of Coronavirus outbreak in China. Brent crude futures were down $0.88, or 1.39%, at $62.33 a barrel. The Brent futures fell to lowest price in last six weeks.   There are concerns that the spread of a respiratory virus from China could lower fuel demand if it stunts economic growth in an echo of the SARS epidemic nearly 20 years ago.

On Thursday, China put on lockdown two cities that were at the epicenter of a new coronavirus outbreak that has killed 17 people and infected nearly 600 as health authorities around the world scrambled to prevent a global pandemic.

The potential for a pandemic has stirred memories of the Sudden Acute Respiratory Syndrome (SARS) outbreak in 2002-03, which also started in China and dented economic growth and caused a slump in travel.

Cases have been detected as far away as the United States and global stock markets were also down in part due to fears of the virus spreading further as millions of Chinese prepare to travel for the Lunar New Year.

Beijing said on Thursday that it had cancelled major public events, including two well-known Lunar New Year temple fairs, to curb the spread.

“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 note.

The US bank maintained its forecast for Brent to average $67 a barrel in the first quarter and $64.50 a barrel throughout 2020.

 With the city of Wuhan quarantined and panic growing as the virus spreads, travel — and with it, demand for oil — is expected to decline as fewer people take to the roads, tracks or sky. Brent crude has dropped almost 6 per cent this week to $62 a barrel, its lowest since early December.

 Most traders are pointing to the coronavirus as the cause of the sell-off. Traders, after all, should always be on guard for supply disruptions such as Iranian threats to the Strait of Hormuz or the loss of exports from Libya. But a new virus with the potential to hammer travel plans in China, the world’s largest oil importer, is harder to see coming. Traders may not yet grasp the full impact. But for oil bulls already wavering in their conviction after the market failed to rally on events in Iran and Libya, it is safer to sell now and worry about the final toll later.                                                                                                                 Business correspondent