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Oil extends decline on concerns about virus' impact on China demand

Published 02/03/2020, 09:14 AM
Updated 02/03/2020, 09:16 AM
© Reuters. Oil extends decline on concerns about virus' impact on China demand
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* Brent post steepest monthly decline in Jan since Nov 2018
* China central bank to inject liquidity to shore up economy
* OPEC, allies may bring forward meeting to February

By Florence Tan
SINGAPORE, Feb 3 (Reuters) - Oil prices extended declines on
Monday, dragged down by worries about lower demand in the
world's largest oil importer China following the coronavirus
breakout.
Brent and U.S. West Texas Intermediate (WTI) crude fell for
a fourth week in a row last week after airlines cancelled
flights to China. Supply chains across the world's second
largest economy have also been disrupted.
Brent crude LCOc1 was at $55.83 a barrel by 0047 GMT, down
79 cents, or 1.4%, after losing nearly 12% in January, the
steepest monthly decline since November 2018.
U.S. West Texas Intermediate (WTI) crude CLc1 fell 50
cents to $51.06 a barrel, after earlier hitting a session low of
$50.42. The front-month WTI price fell 15.6% in January, the
biggest monthly drop since May.
China's factory activity stalled in January as export orders
fell while analysts expect a big plunge in February's data as
the virus outbreak hit demand in the country, even as the
central bank planned to inject more liquidity to shore up its
economy. "The shuttering of airports suggests that there would be at
least some demand delay, if not deferred or destroyed," said
Michael McCarthy, chief market strategist at CMC Markets in
Sydney.
The Organization of the Petroleum Exporting Countries
(OPEC)and its allies could bring forward their March meeting to
February to discuss the impact on oil demand from the virus
flare-up. OPEC's oil output plunged in January to the lowest since
2009 after several members led by Saudi Arabia overdelivered on
a new agreement to cut production and as Libya's supply
slumped.

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