Oil prices changed little Monday as concerns of falling fuel demand caused by the economic fallout from the coronavirus outbreak in China were offset by expectations that output cuts from major producers will tighten crude supply.
Brent crude was at $57.27 a barrel, down 5 cents after rising 5.2% last week, the biggest weekly gain since September 2019.
US West Texas Intermediate crude rose 3 cents to $52.08 a barrel, after a 3.4% gain last week, Reuters reported.
Japan, the world’s fourth-largest oil consumer, reported an economic contraction of 6.3% for the October to December period and there is an expectation of a further contraction in the January to March quarter because of the contagion.
Singapore, whose trade-dependent economy is a barometer for the region, also warned of the potential for a recession this quarter because of the outbreak.
The International Energy Agency said last week that the virus is set to cause oil demand to fall by 435,000 barrels per day in the first quarter of 2020 from the same period a year ago, in what would be the first quarterly drop since the financial crisis in 2009.
Oil did rise last week for the first time since early January on optimism that Chinese economic stimulus measures amid the outbreak could lead to a recovery in oil demand in the world’s largest importing country.
Investors are also anticipating that the Organization of the Petroleum Exporting Countries and its allies, including Russia, will approve a proposal to deepen production cuts to tighten global supplies and support prices.
The group, also known as OPEC+, has an agreement to cut oil output by 1.7 million bpd until the end of March. A technical committee has recommended the group reduce production by another 600,000 bpd because of the impact from the coronavirus.
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