*Analysts fear reduced demand of oil as virus death toll rises
*U.S. oil inventories rose more than expected
Oil prices were lower on Thursday afternoon in Asia as continuing cancellations of flights to and from China prompted traders to fear that demand would be dramatically reduced, especially if the cancellations continue more than the week or two originally planned. Also pushing prices lower were reports from the U.S. Energy Information Administration on Wednesday which showed that U.S. crude inventories rose more than seven times expectations, increasing by 3.5 million barrels last week. Gasoline stocks were also higher, hitting a record high after increasing for the 12th consecutive week, to 26.1. million barrels, the EIA reported.
U.S. WTI futures plummeted 1.03 percent as of 2:12 p.m. HK/SIN, to trade at $52.78 per barrel. Brent crude futures were down 1.02 percent to $59.20 per barrel. Air Canada has officially halted all flights from Canada to Beijing and Shanghai from January 30 through February 29. British Airlines has temporarily suspended services to China and will update its official policy tomorrow after reassessing the situation. However, as the death toll from the coronavirus climbed from 132 on Wednesday to 170 on Thursday, and the number of reported cases continues to increase, it is highly unlikely that flights will be reinstated any time soon.
The World Health Organization will be meeting again later today to assess the situation and to reconsider whether the virus classifies as a global health emergency. Cases have been reported in at least 16 countries thus far.
"In the last few days the progress of the virus, especially in some countries, especially human-to-human transmission, worries us," WHO Director-General Tedros Adhanom Ghebreyesus said on Wednesday, pointing to Germany, Vietnam and Japan.
Other Market Movements
Gold prices continued to rise on Thursday as traders flocked towards safe-haven assets as contagion fears spread. Futures for the precious metal were up 0.414 percent to $1,576.90 per barrel. Silver futures rose 0.53 percent to $17.58 per barrel.
The Australian dollar continued its decline thanks to its high exposure to the Chinese market. It fell 0.252 percent against the U.S. dollar to trade at $0.6736. The dollar fell against the safe-haven yen, trading down 0.073 percent to 108.91.
Traders are now eyeing the Bank of England meeting later today as Governor Mark Carney chairs his last meeting and is likely to cut interest rates on the day before the UK is set to leave the European Union. According to CNBC, markets priced in a 45 percent chance that rates would be cut to 0.5 percent from 0.75 percent.