Oil edges down as traders assess China's oil demand

Coronavirus impact Opec cuts oil demand forecast for 2020

Coronavirus impact Opec cuts oil demand forecast for 2020

Oil has dropped more than 25% from a peak in January with USA crude back below $50 a barrel after the spreading virus hit demand in China, the world's largest oil importer, and fueled concerns about excess global supplies. Quarter two of 2020 is expected to average 1.04 million barrels per day, falling to 1.02 million in quarter three and increasing again to 1.03 million in quarter 4.

In its monthly report on the world's oil market, Opec said it now expects growth in global oil demand of 0.99 million barrels per day (mbd) this year, down from the 1.22 mbd forecast last month.

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While the virus outbreak is hurting China's economy - and others affected such as Japan and Singapore - San Francisco Federal Reserve Bank President Mary Daly, said the coronavirus impact on the US economy has been limited. Worldwide airlines have also halted flights to China.

"Oil markets are continuing to experience downward pressure from the coronavirus health crisis, which has brought China's transport and manufacturing sectors to a virtual standstill", analysts at Eurasia Group said in a report.

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Since topping out at $68.07 a barrel on January 6, Brent crude oil, the worldwide benchmark has plunged into a bear market, falling by as much as 21.7 percent. Saudi Arabia, meanwhile, didn't cut the 500,000 bpd it promised, producing 400,000 barrels below its official quota, perhaps signaling that it is "not prepared to shoulder additional output cuts alone, as had been the case for much of 2019", according to Franziska Palmas, assistant economist at the London-based Capital Economics. The group had been discussing possibly moving up its March meeting to February due to the demand destruction caused by the coronavirus. The two-day meeting that started Sunday is being closely watched for any sign of a deal that could restore over 1 million barrels a day of output to global oil markets. Russian Federation has been resisting Saudi Arabian efforts to reduce output after OPEC+ technical experts recommended an additional cut of 600,000 barrels a day through June.

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