​Oil holds near $51 as fear over virus threat to demand returns

Oil held near $51 a barrel as a more severe assessment of China’s coronavirus renewed fears over the threat to fuel demand.

World oil consumption will fall this quarter for the first time in over a decade – wiping out the growth previously expected – as the epidemic reduces economic activity and travel in China, according to the International Energy Agency. Cases of the disease in the country jumped by almost 15,000 after Hubei province, its epicenter, changed the way it calculates infections.

West Texas Intermediate crude for March delivery was little changed at $51.19 a barrel on the New York Mercantile Exchange as of 1:25 p.m. London time. It climbed 2.5 per cent on Wednesday. Brent for April settlement declined five cents to $55.74 on the ICE Futures Europe exchange.

At least fourAsian oil refinerswill take delivery of less Saudi Arabian crude than planned in March as the outbreak dents demand for fuel and creates a glut of alternative supplies, according to people with knowledge of the companies’ imports. Several shipments of liquid petroleum gas have been resold and diverted away from China, according to shipping intelligence firmVortexaLtd.

Hopes that OPEC and its partners might imminently step in to shore up the market were also starting to fray.

Russia, which has so far resisted pressure from Saudi Arabia to consider fresh production cuts, hasn’t yet decided on whether action is needed and will settle its position in a “timely” way, a Kremlin spokesman said on Thursday.

“There are two factors driving short-term prices,” said HarryTchilinguirian,head of commodity markets strategy at BNP Paribas SA. “First is the ebb and flow of coronavirus statistics, and the second is the anticipation that Russia will eventually agree to cooperate with its OPEC counterparts for additional supply cuts.”

In another sign of weakening consumption, the U.S. reported the biggest weekly jump in crude stockpiles in three months.

© 2020 Bloomberg L.P.

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