Oil Dives Toward Worst Monthly Loss Since May on Virus Fears

(Bloomberg) -- Oil spiraled toward its worst monthly performance since May on growing alarm that China’s viral outbreak is crippling fuel demand, prompting OPEC to consider an emergency meeting.

Futures dropped 2.2% in New York on Thursday, falling to a five-month low. Centers for Disease Control and Prevention reported the first case of human-to-human transmission of the deadly coronavirus in the U.S. Futures pared losses after the close as the World Health Organization declared the outbreak of the virus a global health emergency but said it is not recommending any restrictions on trade and travel.

The Organization of Petroleum Exporting Countries is considering moving its March meeting to next month, though cartel ally Russia was said to be resistant.

“This is a panic and the market is testing investors,” said Mark Waggoner, president of Excel Futures Inc. “We haven’t hit the real lows yet and it’s hard for me to believe it will stop here.”

Crude may slip to $50.50 a barrel before rebounding, Waggoner said.

Tens of millions of people are being held in virtual quarantine while factories, schools and coffee shops shut as Chinese officials struggle to contain the virus. Russia closed its 2,600-mile (4,180-kilometer) border while Hong Kong employed prisoners to cure a dire shortage of surgical masks.

Authorities in China, the world’s biggest energy consumer, are locking down entire cities. Sanford C. Bernstein & Co. and Morgan Stanley are cutting forecasts for the country’s oil consumption, with jet fuel most imperiled.

See also: China Oil Demand Seen Taking a Big Virus Hit in Latest Forecasts

West Texas Intermediate crude for March delivery fell $1.19 to $52.14 a barrel on the New York Mercantile Exchange. The U.S. benchmark has tumbled 15% this month and if the slump continues on Friday, the monthly loss could exceed May’s 16% decline.

Brent for the same month declined $1.52 to $58.29 a barrel on the London-based ICE Futures Europe exchange.

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