Brent seen another price drop as coronavirus cuts demand

Oil fell on Monday, Mar. 16 as an emergency rate cut by the U.S. Federal Reserve failed to soothe global financial markets panicked by the rapid spread of the coronavirus, while a price war between top producers added to a growing supply glut, Reuters reports.

Brent crude fell USD 2.07 to USD 31.78 a barrel by 0729 GMT, extending last week’s plunge of 25%, which was the largest weekly fall since 2008. The front-month price opened at a high of USD 35.84 but slipped to a low of USD 31.63.

As reported, U.S. crude was at USD 30.35, down USD 1.38 after slipping below USD 30 earlier in the session, losing ground despite U.S. President Donald Trump’s pledge to fill strategic petroleum reserves (SPR) in the world’s largest oil consumer “to the top”.

“While helpful on the margin, such (SPR) policy pales in comparison to a coronavirus plagued market that is measured in months or a price war that is expected to last several quarters or longer,” RBC Capital Markets analyst Michael Tran commented to Reuters.

Oil prices have come under intense pressure on both demand and supply sides: Worries about the coronavirus pandemic slashing oil buying persist, while oversupply fears have grown after top exporter Saudi Arabia ramped up output and slashed prices to increase sales to Asia and Europe.

As a reminder, on Mar. 9 crude oil market experienced a major plunge since the year 1991.

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