Coronavirus crisis: Huge slump in demand for oil as Chinese economy grinds to a halt

OPEC has cut its growth forecasts and said output fell sharply in January as producers implemented a new supply-limiting pact as China’s enormous economy grinds to a halt as a result of the epidemic. Oil prices have fallen 15 percent this year to $55 a barrel.

An OPEC report said: “The impact of the coronavirus outbreak on China’s economy has added to the uncertainties surrounding global economic growth in 2020, and by extension global oil demand growth.

“Clearly, the ongoing developments in China require continuous monitoring and assessment.”

Some analysts believe the market may have bottomed out on hopes the virus impact will peak this month.

OPEC, Russia and other producers, a group known as OPEC+, have since implemented a deal to cut output by 1.7 million barrels a day to support the market.

The producers are also considering bringing forward their next policy meeting to February from March 5.

OPEC is yet to make any announcement on an early meeting and Iran’s oil minister said the pressure to reschedule the gathering had eased.

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The Global Health Emergency’s impact on the global economy is starting to be felt across the board.

AXA Investment Manager’s chief economist Gilles Moec warned the virus could be part of a “perfect storm” for Europe that hurts the economy for months before it gets compounded by a heated trade battle with the US.

He said: “We started with the premise that this virus would be worse than SARS and that has now become consensus.

”So attention turns to who is hit the hardest and Europe is among the usual suspects and Germany in particular, given China is its biggest export market.”

Europe’s main markets followed Asia into red, while stocks on Wall Street traded slightly lower to little changed.

The coronavirus death toll leapt by 242 overnight to a total of 1,365 and the number of total infections soared past 60,000.

After changing the way they record the virus, the Health Commission in the Chinese Hubei province found there were 15,000 more than they thought which meant the figure shot up from 45,000 to 60,000 in the world in a single day.

Mike Ryan, head of the World Health Organisation’s health emergencies programme, said: ”Crucially we understand that most of these cases relate to a period going back over days and weeks and are retrospectively reported as cases, sometimes back to the beginning of the outbreak itself.

“Outside cases on the Diamond Princess cruise ship we are not seeing dramatic increases in transmission outside China.”

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A further 44 cases were reported on the Diamond Princess today, raising the total to 219, though authorities said some elderly people would finally to be allowed to disembark on Friday.

Dr Ryan said the rest of a WHO-led mission was expected to start arriving in China over the coming weekend, joining an advance team already in Beijing to help investigate the outbreak.

He said: “In terms of the international mission, the advance team and their Chinese counterparts have now finalised the scope of work and design of the mission.

“I can assure you the team is top-class scientists from all over the world and all of the relevant countries who can contribute to an endeavour such as this.”

source: express.co.uk