By Barani Krishnan
Investing.com - Oil hit 13-month lows on Wednesday, ignoring positive weekly data on U.S. crude stockpiles, as the coronavirus scare sweeping the globe erased Wall Street’s recovery from an epic two-day loss and put investors further on the defensive.
Brent, the London-traded global benchmark for crude, settled down $1.42, or 2.6%, at $52.84 per barrel by 2:38 PM ET (19:38 GMT). Brent earlier hit a 13-month low of $52.39, setting itself on course to test the strong $50 support it had held since January 2019.
West Texas Intermediate, the U.S. crude benchmark, settled down $1.17, or 2.3%, at $48.73 per barrel. WTI sunk to $48.30 earlier, its lowest since January 2019 as well.
Brent and WTI have lost almost 10% each over a four-day selloff. Both benchmarks are down about 20% on the year, hurtling them back toward bear-market territory after a short-lived rebound last week as investor concerns over the pandemic in China eased briefly.
Oil prices began Wednesday’s New York session higher and extended gains by midmorning after the U.S. Energy Information Administration reported a smaller weekly build in domestic crude stockpiles and bigger drawdowns in gasoline and distillates that indicated higher demand.
But by noon, the market gave up its gains after another spike in global reports of Covid-19 cases made clear to investors that a pandemic largely confined to China until last month was now becoming a global problem.
Brazil reported its first coronavirus case on Wednesday, the first in Latin America, while Germany said it had seven new cases, continuing the rash of infections seen outside of China that have run from Iran to South Korea.
U.S. Food and Drug Administration Director Peter Marks, meanwhile, sad it could take up to two quarters for a coronavirus vaccine to enter human trials, versus previous estimates of three months. President Donald Trump scheduled a news conference for 6:00 PM ET (23:00 GMT), after tweeting earlier that the “fake news” media was hyping the pandemic.
“The coronavirus is simply leaving oil bulls nowhere to hide, even with the relatively positive data the EIA put out,” said John Kilduff, partner at New York energy hedge fund Again Capital.
This week’s selloff in oil raises questions on how effective an intervention that the OPEC+ alliance of global oil producers could do when it meets in Vienna on March 6. For more than two weeks now, Saudi Arabia, which dominates OPEC, has been pushing the group to agree to a 600,000-barrels-per-day cut ahead of the meeting to calm the market and stop the price bleeding. But Riyadh’s top ally, Russia, has resisted the plan, saying further discussions were needed on what’s appropriate as intervention.
On the inventories side, {ecl-75||U.S. crude stockpiles}} climbed by 452,000 barrels for the week ended Feb. 21, the EIA said. That compared with expectations for a build of 2 million barrels, according to forecasts compiled by Investing.com.
Gasoline inventories dropped by 2.7 million barrels, versus forecasts for a decline of about 2.25 million barrels. Distillate stockpiles fell by 2.1 million barrels, compared with expectations for a drawdown of 1.71 million barrels.