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Oil futures headed toward a fourth straight decline Friday morning, pushing crude to sharp weekly losses as the death toll in China rises from an outbreak of a SARS-like virus, threatening to hurt demand and weigh on a market already fretting over rising supplies.
On Friday, China’s National Health Commission confirmed more than 800 cases of the coronavirus, an illness akin to severe acute respiratory syndrome, or SARS. So far, the death toll has risen to 26 from 17 at last count, according to the commission and state media.
“In the last few days the oil price has suffered, with 4 consecutive trading sessions in the red as investors are seeing growing chances – again – of oversupply for the next few months, particularly with US inventories rising earlier this week,” wrote Carlo Alberto De Casa, chief analyst, ActivTrades, in a Friday note.
West Texas Intermediate crude for March delivery CLH20, -0.56% are down 19 cents, or 0.4%, at $55.39 a barrel on the New York Mercantile Exchange, after falling 2% on Thursday, marking its lowest finish since Nov. 29 for a front-month contract, according to Dow Jones Market Data.
March Brent crude BRNH20, -0.64% gave up 29 cents, or 0.5%, at $61.78 a barrel on ICE Futures Europe, following a nearly 2% skid in the previous session which has taken the contract to its lowest level since Dec. 3.
For the week, WTI is on track to decline 5.4% based on the most-active contract, while Brent is on pace for a weekly slide of 4.8%, according to FactSet data.
China has banned travel in and out of Wuhan, where the first cases of the coronavirus outbreak appeared last month, but a number of other cities also have limited travel. Singapore confirmed its first case of the virus on Thursday.
The World Health Organization stopped short of declaring an international health emergency due to the coronaviruses spread but did describe the outbreak as a China emergency at gathering on Thursday.
“Moreover, there is some anxiety for the possible impact from Chinese flu, even if at this stage we cannot understand how this fear is justified and how it will impact on oil demand,” De Casa said.
Oversupply concerns, despite a disruption to Libyan oil production, have been additional worries for the investors of the commodity.
“The key, of course, for oil is to determine how quickly the quarantines will be lifted and whether this virus is really under control or does it continues to spread,” wrote Phil Flynn, senior market analyst at The Price Futures Group.
Looking ahead investors will be watching for a weekly update of rigs drilling for oil from Baker Hughes, after oil-services company Baker Hughes BKR, +1.23% last week reported that the number of active U.S. oil rigs rose by 14 to 673.
Worries about the Asian influenza come after China last week reported its slowest rate of expansion in years, which had contributed to some fears of demand from the second-largest economy in the world.
