Oil continues decline as virus outbreak hits China demand

Oil prices continued losses due to lower demand in China in the face of the virus outbreak. China is the world’s largest oil importer.

US West Texas Intermediate (WTI) and Brent crude slid for the fourth straight week after international airlines canceled flights to China. Supply chains in China have also been disrupted, causing its largest refiner Sinopec to cut production.

Brent crude fell 48 cents, or 0.9%, at $56.14 per barrel by 0241 GMT. US West Texas Intermediate (WTI) was at $51.32 per barrel, down 24 cents.

China’s economic measures could support the oil prices in short-term, despite a weak outlook on oil demand, said Michael McCarthy, chief market strategist at CMC Markets in Sydney.

China’s factory production stalled when export demands fell in January, and analysts expect a bigger decline in February as the virus outbreak impacts demand.

The Chinese central bank planned to incorporate more liquidity to support the economy and pledged to use different monetary policy tools to lessen the effect of the virus outbreak.

The OPEC+ (Organization of the Petroleum Exporting Countries and its allies) could move their March meeting to February to discuss the effect of the virus outbreak on oil demand. OPEC and Joint Technical Committee (JTC) have scheduled a meeting in February to evaluate the virus’ impact.