(Bloomberg) — Oil held its biggest loss in almost seven weeks as investors attempted to gauge the economic consequences of the fast-spreading coronavirus and whether it would become a global pandemic.
Futures in New York edged higher after tumbling 3.7% Monday amid a broad market selloff driven by a sharp uptick in cases and deaths from the virus in South Korea, the Middle East and Europe. At least 12 people have died in Iran and Kuwait and Bahrain confirmed their first cases, with the head of the World Health Organization calling the outbreak’s spread “deeply concerning.”
Crude had rallied over the past couple of weeks on optimism the virus would be mainly contained in China and the global economy would avoid a major slowdown. Those assumptions are now in doubt following the rapid spread over the past few days, which is also likely to put more pressure on OPEC and its allies to take action to stabilize oil markets.
“Sentiment took a beating overnight and I suspect there’s a bit more to come, considering the growth indicators we’ve seen outside China,” said Daniel Hynes, senior commodity strategist at ANZ Banking Group Ltd. in Sydney. “Up until now, concern had been centered on China itself and this does raise the stakes a fair bit.”
West Texas Intermediate for April delivery rose 0.4% to $51.61 a barrel on the New York Mercantile Exchange as of 9:28 a.m. in Singapore. It slumped $1.95 on Monday to close at $51.43, the lowest since Feb. 13.
Brent for April settlement added 0.4% to $56.54 on the ICE Futures Europe exchange after falling 3.8% on Monday. The global crude benchmark traded at a $4.94 premium to WTI.
–With assistance from James Thornhill.
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