By David Hodari

U.S. oil prices had their worst week since 2008, when the global financial system was melting down, as the coronavirus-driven selloff in risky assets accelerated.

West Texas Intermediate, the U.S. crude benchmark, fell 4.95% on Friday to close at $44.76 a barrel, the lowest price in over a year. Friday's decline contributed to a weekly loss of 16.15%, the biggest weekly decline since December 2008.

Brent, the international oil price gauge, lost 3.18% on Friday to settle at $50.52 a barrel. In early trading Brent dropped below $50 a barrel for the first time in 2 1/2 years. It lost 13.64% this week.

"There is now the real danger of a major economic shutdown in large parts of the world as the coronavirus is now spreading rapidly, with a potential huge downward impact on oil demand," said Fereidun Fesharaki, chairman of FGE, an energy consulting group.

Italy's coronavirus outbreak is being linked to a growing number of infections around Europe, prompting nations and corporations to scale down travel. European budget airline easyJet became one of the growing list of airlines to cut back on continental flights, canceling some of its flights to and from Italy for the second half of March.

"We're still in the fear phase with [coronavirus] cases rising across Europe," said Edward Marshall, a commodities trader at Global Risk Management.

Assets exposed to oil also received a hammering from anxious investors.

The currencies of major oil exporters -- the Russian ruble, Norwegian krone and Canadian dollar -- lost ground against the U.S. dollar, while the Japanese yen, considered a haven asset, rose.

Oil and gas stocks were routed. Those in the Stoxx Europe 600 index lost 3.8% on Friday and 13% on the week. U.S. energy companies in the S&P 500 gained 1.25% Friday on a end-of-session climb but still dropped 15% during the week.

U.S. oil majors Chevron Corp. and Exxon Mobil Corp. this week lost 14% and 13%, respectively. Smaller producers generally fared worse. Whiting Petroleum Corp., which drills in North Dakota, shed 33% this week while Oklahoma City's Chesapeake Energy Corp. shares lost 39%.

"It's about survival and you want to own the companies you think will be around," said RBC Capital Markets equity research director Biraj Borkhataria.

The Organization of the Petroleum Exporting Countries and its allies are due to meet next week in Vienna. At issue is whether Saudi Arabia, the de facto leader of OPEC, will be able to convince Russia, the chief ally outside the cartel, to deepen the alliance's four-year-old production cuts. A joint technical committee meeting earlier in February recommended deepening cuts but Moscow has demurred.

"There are two fears hitting oil: one is risk-off selling across assets and at the same time we're not seeing a sufficient production cut," said Xiao Fu, head of commodities research at BOCI Global Commodities.

Some traders are optimistic, though.

"I think they'll surprise the market as OPEC's been abnormally quiet even as oil's been falling like a hot knife through butter," said Global Risk Management's Mr. Marshall. "The fireworks will come out on Thursday, but until then it's free fall."

Write to David Hodari at David.Hodari@dowjones.com

(END) Dow Jones Newswires

February 28, 2020 17:27 ET (22:27 GMT)

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