Oil dropped to its lowest price since 2016, the latest plunge in a wave of negative benchmarks for the global commodity that has been in the red zone for the past days as the coronavirus continues to wreak havoc on world markets.
The retreat gained momentum late Friday, with the West Texas Intermediate crude shedding over 6 percent before bouncing back moderately. At around mid-day, WTI futures fell 4.5 percent to $44.92. WTI has not settled under the $45 mark since 2018. One huge market player, China, seems to be taking advantage of the situation.
International benchmark Brent crude oil futures plummeted to multi-year lows Friday and were poised for their biggest weekly drop in over four years. Brent crude, which dropped around 2 percent Thursday, has shed approximately 14 percent in the last few days, putting it on course for its biggest retreat since 2016.
As the World Health Organization increased its global risk assessment for the virus to "very high," jittery oil players are wondering when might be the best time to be paranoid about demand and its impact on supplies, investment dollars, and eventually, prices of oil.
China's massive oil producers have felt the scare as well, as they scale back their petroleum production, resulting in a huge gaping hole in the demand aspect of the now unstable supply and demand narrative for crude oil.
Some say that China's demand for the commodity now has a 4-million barrel-per-day gap, and the country's imports of crude oil are seen to have slipped by 160,000 BPD in February. Next month could be worse if Saudi Arabia's oil exports to China are any indication.
The epidemic has disrupted oil markets this week. The commodity was always a soft market to virus headlines, but the issue for much of the health crisis remained focused on the effect it would have on Chinese consumption for oil, as the country is the world's biggest importer of oil.
However, reports of new cases outside of the country outpaced reports within it in the past days and made apparent that the coronavirus could mean a global, rather than regional, distortion in demand.
Meanwhile, OPEC is considering a top-level meeting in Vienna next week to tackle whether to trim down the supply to lift global prices. The threat of the epidemic even looms over that meeting. The oil cartel has disclosed it is keeping a tight watch on the health situation in Vienna after cases of the coronavirus were reported.
