Extending the fall for the fifth straight session, oil prices internationally fell to a new 52-week low of $51.27 per barrel, hit by the deadly virus spread across the globe and in Mainland China, that deepened fears that the global economy will slow and lower crude demand.
Oil prices declined by 2.4% to US$ 55 per barrel earlier in the day. Later, the benchmark hit its fresh 52-week low of $51.27 mark.
WTI also dipped for the fifth consecutive day and tested below the $48/barrel. At the same time, MCX crude oil slipped more than 5.84% to 3,399.
Globally, oil prices have been volatile, owing to a global supply glut and muted demand from China, which has been aggravated by the Coronavirus outbreak.
Spread of the coronavirus darkened the outlook for world growth with infections and deaths rising outside China in countries such as South Korea, Italy, Iran, Canada and the US.
In terms of the proportion of China's trade in the calendar year 2019, CRISIL said in its report that China accounts for 25-30% for crude oil across globally and added that the virus outbreak is expected to keep the demand and freight rates low in the short term as fall in imports from China is expected.
With China being a key importer of crude oil, the slowdown in China amid surviving the Covid-19 headwinds will have a major impact on its crude oil consumption, CRISIL added.
"WTI and Brent dipped for the fifth consecutive day and tested below the $48/barrel and $53/barrel respectively. At the same time, MCX crude oil slipped more than 2% and at the lowest level since Jan 9, 2019," as per Evening Round up report by Geojit Financial Services
Brent Crude has declined 12% in a week from $58 per barrel on February 20 to 51.78 per barrel today. Volatility in oil prices has continued over a month now, with the benchmark declining 14% in one month from the closing value of $59.32 per barrel on January 27, 2020. On a YTD basis, crude oil prices are down 16%.
"Crude oil prices (Brent) averaged 63.6 per barrel in the month of January 2020, practically flat month on month (MoM), but tumbled towards the latter half of the month as concerns over the spread of coronavirus came to fore," said IIFL Securities in its Oil and Gas report. A protracted delayed recovery in China from Coronavirus will have a cascading impact on crude oil prices, warranting deep supply cuts, it added further.
Further, the report continued the risk posed by the Covid-19 crisis has prompted the OPEC+ countries to consider an additional cut to oil production of 0.6 mbpd (Thousand barrels per day) as an emergency measure on the top of 1.7 mbpd already pledged to support prices.
"While the OPEC compliance to a production cut, continues to be high (Dec'19: 166%), but is unable to lend support to prices on weaker demand and rising Non-OPEC production," it added.
In the meanwhile, the crude market is also anticipating possible deeper output cuts by the 23-country group, known as the Organization of the Petroleum Exporting Countries (OPEC) and its allies including Russia. OPEC+ plans to meet in Vienna from March 5-6.