Crude futures: Ice Brent extends losses

Ice Brent crude futures fell on renewed pessimism over the global demand outlook as the World Health Organisation (WHO) officially declared the coronavirus outbreak a pandemic.

At 08:30 GMT the Ice front-month May Brent contract was at $34.06/bl, down by $1.73/bl from its settlement yesterday when the contract ended $1.43/bl lower.

The Nymex front-month April crude contract was at $31.44/bl, a drop of $1.54/bl from yesterday's close when the contract fell by $1.38/bl.

There are already over 121,500 confirmed cases of the virus, which has killed around 4,370 people worldwide since it began at the end of last year.

"In the days and weeks ahead, we expect to see the number of cases, the number of deaths and the number of affected countries climb even higher," WHO director general Tedros Adhanom Ghebreyesus said. "Pandemic is not a word to use lightly or carelessly," he said.

The US will ban air travel for non-Americans arriving from most countries in Europe, for 30 days beginning at midnight on 13 March, dramatically expanding the scope of travel bans aimed to prevent the coronavirus spread that has cut jet fuel demand globally.

The travel ban affects travellers from the Schengen common visa area, which includes most of the EU, as well as Norway and Switzerland. The air travel ban will not apply to the UK, which is not part of the Schengen zone.

Around 75pc of US companies report supply chain disruptions because of coronavirus-related transportation restrictions, according to a survey by the Institute for Supply Management.

Crude prices are also under downwards pressure as the EIA reported that US crude inventories rose by 7.7mn bl to 451.8mn bl last week, as exports dropped sharply.

But the agency lowered its US production forecasts for 2020-21 because of low crude prices. US crude output should fall to 12.7mn b/d in 2021, the first falls since 2016, according to its latest monthly Short Term Energy Outlook.

The Dubai Mercantile Exchange front-month May Oman crude futures contract was at $33.73/bl at 4.30pm Singapore time, down by $1.66/bl from its price at the same time yesterday.

By Fabian Ng

source: Argus Media