UPDATE 8-Oil falls 2% as specter of China virus threatens fuel demand

* WTI touches lowest since November, Brent hits December low
* Lockdown in city of Wuhan sends shivers through markets
* U.S. imposes fresh Iran-related sanctions
* U.S. crude stockpiles drop slightly -EIA

(Adds commentary)
By Stephanie Kelly
NEW YORK, Jan 23 (Reuters) - Oil prices fell 2% on Thursday
on concern that the spread of a virus from China could lower
fuel demand if it stunts economic growth, but losses were
limited by a drawdown in U.S. crude inventories.
Brent crude LCOc1 futures fell $1.17, or 1.9%, to settle
at $62.04 a barrel. The session low was $61.25, the lowest since
early December.
U.S. West Texas Intermediate (WTI) crude CLc1 ended down
$1.15, or 2%, at $55.59 a barrel, after hitting $54.77, its
lowest since November.
Two Chinese cities were put in lockdown on Thursday as
health authorities around the world scrambled to prevent a
global pandemic. The coronavirus outbreak has killed 18 people
and infected nearly 630.
The potential for a pandemic has stirred memories of the
Severe Acute Respiratory Syndrome (SARS) outbreak in 2002-03,
which also started in China and caused a slump in travel.
"The market continues to retreat under demand concerns and
shake off the rally after the OPEC production cuts," said Gene
McGillian, vice president of market research at Tradition Energy
in Stamford, Connecticut.
With coronavirus cases detected as far as away as the United
States, global stock markets also felt the effects of fears that
the virus could spread further as millions of Chinese prepare to
travel for the Lunar New Year this weekend. MKTS/GLOB
"We estimate a price shock of up to $5 (a barrel) if the
crisis develops into a SARS-style epidemic," JPM Commodities
Research said in a note.
The U.S. bank maintained its forecast for Brent to average
$67 in the first quarter and $64.50 throughout 2020.
Amid recent heightened tension between the United States and
Iran, the United States on Thursday imposed Iran-related
sanctions on two individuals and six companies, including four
firms tied to the National Iranian Oil Company. Tempering losses, U.S. crude inventories USOILC=ECI fell
405,000 barrels last week, although gasoline stockpiles rose to
their highest on record after 11 weeks of consecutive builds,
the Energy Information Administration reported. EIA/S
"Crude inventories have ticked slightly lower in the last
week, as a minor drop in imports has been offset by lower
refining activity," said Matthew Smith, director of commodity
research at ClipperData.
China, meanwhile, released data showing gasoline exports
rose by nearly a third last year thanks to new refineries.
This week, the International Energy Agency (IEA) said it
expects a surplus of 1 million barrels per day in the first half
of the year. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
CHART: U.S. oil may drop further to $54.67 after weak bounce
Brent oil may slide more to $60.91 ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>