Oil Extends Fall on Coronavirus-Related Demand Fears
February 25 2020 - 12:35PM
Dow Jones News
By Sarah Toy
Oil prices fell again Tuesday, weighed down by investors'
concerns about how the spread of t he coronavirus outside China
will affect global oil demand.
U.S. crude prices fell 1.5% to $50.66 a barrel in morning
trading after falling 3.7% on Monday. Brent, the global gauge of
prices, declined 1.2% to $55.61 a barrel after dropping 3.8% the
day before.
Investors were still trying to gauge the fallout from the virus.
Although China is seeing a drop in new coronavirus cases, outbreaks
continue to grow outside the country, spooking investors who had
thought the worst had passed.
"Recent developments and signs of worsening outbreaks in
countries such as Iran, Italy and South Korea have severely dented
this foundational assumption, forcing markets to re-assess the
severity of the headwinds ahead," analysts at IHS Markit wrote in a
Tuesday note.
Prices were also under pressure from a rift in the partnership
between Russia and the Saudi Arabia-led Organization of the
Petroleum Exporting Countries that could weaken the cartel's
ability to influence prices. Saudi Arabia is considering a break
from its four-year oil-production alliance with Russia after the
country rejected a Saudi push to deepen the alliance's existing oil
production curbs by 600,000 barrels a day.
Elsewhere in commodities, most-active gold futures pared some of
their Monday gains, falling 1.2% to $1,656.70 a troy ounce. The
precious metal jumped to a seven-year high on Monday, as investors
sought havens amid rising fears about the economic impact of the
coronavirus epidemic.
"Gold prices are softer as markets take a day to process
yesterday's market carnage," wrote Edward Moya, senior market
analyst at Oanda, in a note.
Natural-gas prices, meanwhile, edged up 0.9% to $1.843 per
million British thermal units after falling 4% on Monday on warmer
weather forecasts.
Write to Sarah Toy at sarah.toy@wsj.com
(END) Dow Jones Newswires
February 25, 2020 12:20 ET (17:20 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.