China’s Coronavirus Hits Oil Prices
Shortly after the media began to write about the new coronavirus in Wuhan, economists predicted that the virus would affect the oil sector.
The oil prices have dropped dramatically when infected people were found in a few countries and flights to China were cancelled. It has already been estimated that the cancellation of hundreds of flights to the Chinese airports and within the country will lead to a decrease in demand for aviation kerosene and crude oil by about 260 thousand bar per day. Meanwhile, aviation fuel accounts for approximately 15% growth in demand in China.
These simple calculations turned out to be enough for oil futures to fall by more than two percent on Monday to three-month lows, while OPEC started talking about new cuts in oil production. Brent crude fell by 2.3% and was sold at 59.32 dollars per barrel. A barrel of American oil was sold at 53.14 USD (the minimum since October 2 of last year).
The oil prices are also affected by the fluctuations of securities which also fall on the news about the Wuhan coronavirus. The demand for reliable financial instruments and assets such as the Japanese yen and the US government bonds is growing.