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Oil futures lost ground Friday as concerns about the spread of COVID-19 in China and beyond took a toll, but remained on track for a weekly gain.
West Texas Intermediate crude for April delivery CLJ20, -1.78% on the New York Mercantile Exchange fell 80 cents, or 1.5%, to $53.08 a barrel, while April Brent crude BRNJ20, -1.80% lost 95 cents, or 1.6%, to trade at $58.36 a barrel. WTI is on track for a 2% weekly rise, based on the most active contract, while Brent is up 1.8% for the week.
“The relief about the containment of the COVID-19 virus in China proved to be only short-lived,” said Carsten Fritsch, analyst at Commerzbank, in a note.
“For one thing, the situation in China is still far from normalizing. And for another, concerns about the virus spreading outside China are increasing, which is putting noticeable pressure on oil prices this morning,” Fritsch wrote.
The World Health Organization on Friday said there were 76,767 confirmed cases of COVID-19, with the death toll at 2,247. While the number of new cases world-wide slowed for a second day, analysts said concerns remain over the number of reported infections outside China. The WHI said there were 1,019 new cases world-wide, with 100 in South Korea, which has seen a large uptick in recent days.
While the viral outbreak has raised worries over global demand for crude, analysts said positive developments on the supply front, including strife in Libya, renewed pressure on Venezuelan exports, and the prospect of deeper output cuts by the Organization of the Petroleum Exporting Countries and their allies are also moving into focus and could provide underlying support.
“The OPEC/OPEC+ meetings will take place on March 5 and 6, and if the group takes the advice of its technical committee and cuts production by a further 600,000 barrels a day, the massive crude oversupply in February could dissipate considerably,” said Jason Gammel, analyst at Jefferies, in a note.
In other energy trading, March gasoline RBH20, -2.13% fell 1.8% to $1.7566 a gallon, while March heating oil HOH20, -1.56% was off 1.5% at $1.6720.
March natural-gas futures NGH20, -2.24% dropped 2.3% to $1.876 per million British thermal units.
