Advertisement 1

Oil Extends Drop Below $50 After Plunging on U.S. Virus Warning

Article content

(Bloomberg) — Oil rallied back above $50 a barrel after plummeting over the past two sessions on fears the fast-spreading coronavirus will take a major toll on global economic growth.

Futures in New York rose 0.7% in early Asian trading after lurching lower on Tuesday as the U.S. Centers for Disease Control and Prevention warned Americans to brace for a domestic outbreak that would cause significant disruptions to daily life. South Korean cases topped 1,000 and there have been 10 deaths in Italy as the virus spreads rapidly around the world.

Advertisement 2
Story continues below
Article content

Investors are in uncharted territory as they try to gauge whether the virus will morph into a global pandemic and how severe the economic impact will be. A meeting of the Organization of Petroleum Exporting Countries and allied producers in Vienna next week is looming large after Saudi Arabian Energy Minister Prince Abdulaziz bin Salman said Tuesday the group still hasn’t made a decision on whether to extend or modify production cuts.

Article content

“U.S. traders have been less concerned about the impact to demand in the domestic market, but these comments from the CDC hit close to home,” said Michael McCarthy, chief market strategist at CMC Markets in Sydney. “OPEC+ may be considering output cuts, although they haven’t announced anything yet, and that would be very important to the oil markets.”

West Texas Intermediate for April delivery rose 0.7% to $50.27 a barrel on the New York Mercantile Exchange as of 10:03 a.m. in Singapore time after closing down 3% on Tuesday. The so-called put skew — the premium traders will pay for options protecting against a drop in prices over those protecting against a rise — is at the highest level since June.

Brent for April added 0.6% to $55.28 on the ICE Futures Europe exchange after dropping 2.4% in the previous session. The global benchmark crude was at a $5.01 premium to WTI.

Bloomberg.com

Article content
Comments
You must be logged in to join the discussion or read more comments.
Join the Conversation

Postmedia is committed to maintaining a lively but civil forum for discussion. Please keep comments relevant and respectful. Comments may take up to an hour to appear on the site. You will receive an email if there is a reply to your comment, an update to a thread you follow or if a user you follow comments. Visit our Community Guidelines for more information.

This Week in Flyers