Oil prices fell to $56 on international markets on Tuesday, under pressure from fears of the impact of the coronavirus epidemic on demand and a possible inadequate response from leading producers led by the Organization of the Petroleum Exporting Countries (OPEC) and Russia.
On the London market, the price of a barrel fell by $1,34 compared to the previous close and amounted to $56,33. In New York, a barrel traded at $1,02 lower than $51,03, reports Hina.
Traders turned again today to the expected negative effects of the coronavirus epidemic in China on the demand for oil.
Although the number of new cases of infection in China has fallen, global experts warn that the epidemic cannot yet be said to be under control.
China restricted movement and imposed quarantines in several cities, many factories were closed, and large refineries announced reduced oil processing.
The International Energy Agency (IEA) predicts that the demand for oil in the first quarter of this year will decrease by 435 thousand barrels per day compared to the same period last year due to the epidemic, for the first time since the financial crisis in 2009.
All eyes are now on top producers led by OPEC and its allies among independent producers who are considering cutting supply to adjust to damaged demand.
The technical committee proposed to reduce the supply by an additional 600 thousand barrels per day, on top of the current 1,7 million barrels per day, in order to balance the market, shaken by the impact of the epidemic.
Russia asked for more time to analyze the proposal.
"Aversion to risky assets prevailed on the market again," says Commerzbank analyst Carsten Fritsch.
Traders were additionally worried by the announcement of the American technology giant Apple that, due to weakened demand in China, it will not meet the set goals for the first three months of this year.
"It scared the actors in the market and led to sudden sales of assets that are known as risky," said Tamas Varga from the brokerage house PVM.
Separately, OPEC announced on its website that the price of a barrel of the reference basket of oil of its members was 57,24 USD on Monday, which means that it was 51 cents higher than the previous trading day.
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