Oil dropped below $57 per barrel Tuesday, pressured by concerns over the impact on oil demand from the coronavirus epidemic in China and a lack of further action by OPEC and its partners to support the market.
Forecasters, including the International Energy Agency (IEA), have pared 2020 oil demand estimations because of the coronavirus. Although new cases in mainland China have plunged, global experts say it is too early to judge if the epidemic is being contained.
Brent crude was down $1.02 at $56.65 per barrel after rallying in the previous five periods. U.S. West Texas Intermediate crude dropped 82 cents to $51.23.
The coronavirus is having a broader impact on firms and financial markets. Asian shares dropped, and Wall Street was poised to retreat Tuesday after Apple stated it could miss quarterly income steerage due to weakened demand in China.
The IEA last week stated that first-quarter oil demand is more likely to plunge by 435,000 barrels per day (bpd) from the same interval in 2019 in the first quarterly dip since the financial crisis in 2009.
The Organization of the Petroleum Exporting Countries and its allies (OPEC+), including Russia, have been contemplating further production reductions to tighten supply and support prices.
The group, often known as OPEC+, has an agreement to cut oil production by 1.7 million bpd until the end of March.
The next OPEC+ meeting in March is about to consider an advisory committee’s suggestion to lower supply by an additional 600,000 bpd. Discussions on holding an earlier meeting in February appear to have made no progress, OPEC sources stated.