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Oil Prices In Freefall As Pandemic Fears Grow

Oil prices continued plunging for a fifth consecutive trading session, dipping by more than 4 percent early on Thursday as the market fears a coronavirus pandemic that could destroy more oil demand in the coming months.

At 9:27 a.m. EST on Thursday, WTI Crude was plummeting by 4.74 percent at $46.35 and Brent Crude was slumping by 3.90 percent at $50.69. Both benchmarks haven’t traded so low in more than a year, since Christmas Day of 2018. WTI Crude fell below $50 a barrel earlier this week and was approaching the $45 handle early on Thursday, while Brent was flirting with the $50 threshold.  

The massive sell-off in oil extends to equity markets amid fears that a pandemic would severely damage global economic growth. Major Asian and European stock markets were deep in the red on Thursday and the Dow was set to open 450 points lower in what has been so far the worst week since the financial crisis.

While the number of deaths from the coronavirus in China is falling, the outbreak is spreading fast outside China. Italy had 530 cases of coronavirus infections as of early Thursday, 14 people have died, and 42 have recovered from the virus. Countries around Europe started reporting this week their first cases of infections in people who have visited Italy.

Related: Shale Decline Inevitable As Oil Prices Crash

In the U.S., the CDC confirmed on Wednesday an infection with the virus that causes COVID-19 in California “in a person who reportedly did not have relevant travel history or exposure to another known patient with COVID-19,” noting that “It’s possible this could be an instance of community spread of COVID-19, which would be the first time this has happened in the United States.”

Oil prices are now more than 10 percent lower than the levels seen just last week, before fears of a global coronavirus outbreak started slamming riskier assets and equities and sent market participants heavily selling oil. The market largely ignored a relatively bullish EIA inventory report on Wednesday, and it continues to ignore a massive 1-million-bpd supply disruption from restive Libya.

By Tsvetana Paraskova for Oilprice.com

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