Oil declines on oversupply concerns as virus inflicts China demand

SINGAPORE- Oil prices sunk down further, continuing its previous decline from earlier part of January as worries of oversupply dampened market sentiment. Such inactivity was brought by coronavirus contagion that capped oil demand in China, the world’s biggest oil importer.

Brent crude LCOc1 shed 38 cents to $53.63 per barrel with initial trading value of $54.04 by 0100 GMT. US West Texas Intermediate raked out 38 cents, equivalent to $49.94 per barrel following its poor performance of $49.56.

Oversupply concerns still lurk as Russia asked for more time to assess the recommendation of a technical committee urging Organization of the Petroleum Importing Countries and its associates to further cut oil production by 600,000 barrels per day.

Russia Energy Minister Alexander Novak disclosed that Moscow needed enough time to assess and review the current state of affairs, emphasizing that crude production growth would face a slowdown and global demand was still strong.

The oil output reduction plan “failed to alleviate the pressure on oil, in part because the proposal has yet to be formally discussed by OPEC ministers and because Russia continues to push back against further cuts,” said Stephen Innes of AxiCorp.        

Oil traders were also worried on the inadequacy of the oil reduction proposal to strengthen the global markets.