Oil Prices Hit More Than a 1 Year Low
Oil futures ended sharply lower on Monday. The prices hit their lowest settlement in more than a year. All as a result of fears of declining demand in China, the biggest oil importer in the world. Brent crude scored $54, and WTI crude $49.99 on Monday.
The rapid spread of the virus and the precautionary measures harmed the global oil industry. The production products began to decrease by about 50% due to the reduced demand for oil. On the other hand, the prices of some petroleum products in East Asian countries have also started to decline. In particular the rates of aviation fuel, similar to what happens in China. It is not surprising. Many Asian countries canceled flights to and from China.
Oil futures ended sharply lower on Monday
The decline in oil demand is a new phenomenon in the global markets. Observers expect a decrease in crude oil in the global demand in 2020. The drop will of about 8 % if the spread of the infection continues in the upcoming months. On the contrary, Alex Schneiter, CEO at Lundin Petroleum, thinks that the effect will be short-termed without any fundamental changes.
OPEC (The Organization of Petroleum Exporting Countries) and its allies, or what is known as “OPEC+,” will hold a meeting in February to discuss the impact of Coronavirus on global demand for oil.