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Oil falls more than US$1 as coronavirus spreads
[NEW YORK] Oil prices fell more than US$1 a barrel at the start of the trading session on Sunday, as more governments ordered lockdowns to curb the spread of the global coronavirus pandemic that has slashed the demand outlook for crude.
Brent crude futures fell US$1.84 or 6.8 per cent to US$25.14 a barrel by 10.15pm GMT. West Texas Intermediate (WTI) crude futures fell US$1.26 or 5.6 per cent to US$21.37 a barrel.
Oil prices have fallen for four straight weeks and have lost about 60 per cent since the start of the year. The coronavirus, which has infected more than 325,000 and killed over 14,000 worldwide, has disrupted business, travel and daily life. Many oil companies have rushed to cut spending and some producers have already begun putting employees on furlough.
The market has had to contend with the twin shocks of the demand destruction caused by the coronavirus pandemic and the unexpected oil price war that erupted between producers Russia and Saudi Arabia earlier this month.
The current production cut deal expires March 31.
"We believe oil prices will continue to fall into the teens in the short term amid disaster demand destruction, building global stocks and no production limits after April 1," said Joseph McMonigle, senior energy policy analyst at Hedgeye Potomac Research, in a note.
Demand is expected to fall by more than 10 million barrels per day (bpd), or about 10 per cent of daily global crude consumption, said Giovanni Serio, head of research at Vitol, the world's biggest oil trader.
Goldman Sachs estimated demand loss could total 8 million barrels per day (bpd), brought about by countries slowing economic activity to combat the coronavirus outbreak.