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UPDATE 9-Brent logs worst weekly loss in a year as China virus fears swell

Published 24/01/2020, 22:14
Updated 24/01/2020, 22:14
© Reuters.  UPDATE 9-Brent logs worst weekly loss in a year as China virus fears swell

© Reuters. UPDATE 9-Brent logs worst weekly loss in a year as China virus fears swell

* China virus threatens oil demand
* Brent sees 6.4% loss this week, U.S. crude slumps 7.4% for
week
* Speculators raise Brent, U.S. crude oil net longs
* U.S. drillers add oil rigs for second week in a row-Baker
Hughes

(New throughout, updates prices, market activity and comments
to settlement)
By Laila Kearney
NEW YORK, Jan 24 (Reuters) - Crude prices sank more than 2%
on Friday and Brent logged its biggest weekly decline in more
than a year as concerns that a coronavirus will spread farther
in China, the world's second-largest oil consumer, curbing
travel and oil demand.
The virus that has killed 26 people and infected more than
800 has prompted the suspension of public transport in 10
Chinese cities, while cases of infection have been found in
several other Asian countries, France and the United States.
Brent crude LCOc1 settled at $60.69 a barrel, down $1.35,
or 2.2%. The global benchmark fell 6.4% this week, its biggest
weekly loss since Dec. 21, 2018.
U.S. crude futures CLc1 ended at $54.19 a barrel,
shedding $1.4, or 2.5% on Friday and clocking a 7.4% weekly
decline, their largest since July 19.
"It all about the coronavirus all the time, and we're not
getting signs that things are getting any better," said Phil
Flynn, an analyst at Price Futures Group in Chicago.
Health authorities fear the infection rate could accelerate
over the Lunar New Year holiday this weekend, when millions of
Chinese travel.
Experience with previous outbreaks such as SARS in 2003 and
MERS from 2012 suggests the economic impact of an epidemic is
relatively small. However, hedge fund positioning in oil has
become lopsided, with bullish positions outnumbering bearish
ones, leaving the market vulnerable to any disappointing news
about consumption, said John Kemp, a Reuters market
analyst. Money managers increased ICE Brent crude oil futures and
options contracts by 2,828 contracts to 428,990 for the week to
Jan. 21, a 15-month high, while the speculator group raised its
combined U.S. crude futures and options positions by 6,811
contracts to 274,347 during the period. The latest U.S. rig count data, an indication of future
supply from the world's largest crude producer, did little to
support oil prices as energy firms added oil rigs for a second
consecutive week. RIG/U
Also the U.S. government's latest supply report on Thursday
showed gasoline stockpiles grew for an 11th consecutive week to
a record high. EIA/S
"It's difficult to get constructive (about) the oil market
until we see more declines in world inventory," said Andy Lipow,
president of Lipow Oil Associates in Houston.
Oil inventories in the wider industrialized world are above
the five-year average, according to OPEC figures, which analysts
say is limiting the impact of supply losses.
The prospect of further steps by the Organization of
Petroleum Exporting Countries and its allies, known as OPEC+,
could offer support going forward. OPEC+ has been mostly
limiting supply since 2017 and on Jan. 1 deepened a cut in
output.


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COLUMN-Priced for perfection, oil slides on fears coronavirus
will hit demand: Kemp
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