Oil prices plummet over fears of coronavirus outbreak spreading

The price of crude continued to plunge on Monday, dragged down by fears of the deadly coronavirus outbreak, raising concerns about the global economic growth.

International benchmark Brent crude was down 2.95 percent to $58.90 a barrel, after hitting $58.68 earlier, the lowest level since late October. US West Texas Intermediate crude nosedived more than three percent to $55.52, after falling to a four-month low of $52.1 a barrel.

The coronavirus could cut into demand by around 260,000 bpd and reduce oil prices by about $3 per barrel, according to a report from Goldman Sachs.

Saudi Arabia’s minister of energy Prince Abdulaziz bin Salman said OPEC will be closely monitoring developments in global oil markets amid “gloomy expectations” of the outbreak’s impact on the Chinese and global economy.

“Such extreme pessimism occurred back in 2003 during the Sars outbreak, though it did not cause a significant reduction in oil demand,” he said.

The coronavirus, was identified in December and was linked primarily to stallholders who worked at Wuhan’s Hunan Seafood Market in China, has already killed 80 people and infected nearly 2,800 worldwide. The virus has spread to South Korea, Japan, Thailand, Vietnam, and the United States, among other places. On Friday, the CDC confirmed the second case in the US.

Oil prices are also down due to flight disruptions during one of China's busiest travel seasons — the Lunar New Year holiday. Chinese authorites have put on lockdown cities in Hubei province, including Wuhan, believed to be the epicenter of the outbreak, affecting millions of travelers.

China has announced an extension of its Lunar New Year holiday through February 2 and suspended sales of package tours to help battle the spread of the disease.

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