Hope of seamless implementation of Nigeria’s 2020 Budget may be threatened as crude oil prices tumbles over spread of China virus (Coronavirus). The budget was based on a projected price of crude oil of $57 per barrel.
Oil futures were set for a sixth day of losses on Tuesday as the death toll from a virus in China rose, but the heavy sell-off of recent sessions was curbed by output outages in Libya and OPEC comments designed to calm demand fears.
U.S. West Texas Intermediate CLc1 was down 33 cents at $52.81 a barrel, after slipping to its lowest since early October in the previous session. Both contracts are on track for their worst monthly falls since May.
The United States and other countries warned against travel to China as the coronavirus death toll rose to more than 100 within China and after the virus was detected in more than a dozen other countries.
Japan, one of the world’s top oil buyers, warned about the risks to its economy from the virus, which has turned investors to save-haven assets such as U.S. Treasuries or gold.
Oil investors are concerned the outbreak could dampen demand for crude and related products against a backdrop of plentiful supply.
In Asia, jet fuel prices have dropped and refiners’ profits for the product have slumped to the lowest in more than 2-1/2 years, while industry analysts are cutting their 2020 forecasts for jet fuel and overall oil demand.
“If air passenger traffic in China declined by half in first quarter of 2020, it would likely lead to a 300,000 barrels per day (bpd) year-on-year decline in jet-kerosene demand from China,” Barclays said in a note.
The bank said on Tuesday that oil prices could lose $2 per barrel, slipping to $62 per barrel and $57 per barrel on the bank’s full-year forecast for Brent and WTI, respectively.
But OPEC officials have also started weighing their options, which include extending the current oil output cuts until at least June, with the possibility of deeper reductions if oil demand in China is heavily hit by the virus, OPEC sources said.
While markets wait for an update on China’s oil demand, one eye remains on Libya where output is down by nearly 75% to just below 300,000 bpd amid the most extensive oil blockade for years.
“As long as Libya continues to be shut, OPEC probably does not need to do anything,” said Olivier Jakob of consultancy Petromatrix.
With additional reports from Reuters.