Oil Slumps to 3-Month as Virus Eats Into Chinese Demand

By Peter Nurse

Investing.com – Oil prices slumped Monday, as the intensified efforts of the Chinese authorities to curtail the spread of the coronavirus look set to have a significant impact on demand from the world’s largest importer of crude.

By 8:35 AM ET (1335 GMT), futures were down 2.8% at $52.68 a barrel, having earlier hit a 16-week low of $52.19. , the global crude benchmark, was down 2.7% at $58.30 a barrel, off the 16-week low of $57.74.

Outside China, 12 countries have also reported infections from the virus — Australia, Canada, France, Japan, Malaysia, Nepal, Singapore, South Korea, Taiwan, Thailand, Vietnam and the United States.

“Macro concerns over energy demand due to curtailed movement of people and trade have been weighing on an oil market that is otherwise tight due to ongoing supply concerns in Libya and OPEC+ output cuts,” said analysts Warren Patterson and Wenyu Yao at ING, in a research note.

More losses are likely looking at the latest commitments of traders data from the U.S. Commodity Futures Trading Commission.

The SARS-like virus has claimed the lives of at least 80 people, with approaching 3,000 confirmed cases. As a result, China has placed almost 60 million people on lockdown, with full or partial travel restrictions on 15 cities across Hubei, the central Chinese province of which Wuhan, where the virus was first detected, is the capital.

These numbers show that money managers were very bullish on ICE (NYSE:) until last week, said ING. Managed money net longs were reported at 428,990 lots on Jan. 21. That’s up 2,828 lots week on week, and at levels not seen since October 2018.

“It appears that some of these longs have been liquidated over the past few sessions as demand expectations are dimmed in the short-term at least,” added ING.

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