Oil markets reacted negatively to the news coming out of China regarding the spread and the consequences of the Coronavirus outbreak.
According to recent data, Chinese economic activity is currently being affected by the epidemic. Factor activity kept steady in January while export orders fell. Besides what we've already mentioned analysts expect the economic situation to worsen in the next month since they expect domestic demand to be affected, especially because the Chinese people are choosing to stay home instead of spending their money on non-essential purchases.
Recently a private survey stated that Chinese manufacturing activity expanded at its slowest pace in 5 months in January. Markit/Caixin's manufacturing PMI was at 51.1, indicating an expansion. Official figures show that the manufacturing PMI was at 50.0 last month, showing stagnation in the manufacturing sector.
However, such data doesn't reflect completely the effects of the virus outbreak in the manufacturing sector since it takes into account data that was obtained before the epidemic was known. It's likely that the detrimental effects of the outbreak will be better reflected in the data of the upcoming months.
The coronavirus outbreak death toll recently spiked to over 360 just in China, exceeding the number of fatalities of the SARS epidemic. The outbreak is currently considered a global health emergency by the World Health Organization since the epidemic has been expanding through the world, as the first foreign death was recently reported in the Philippines.
According to sources, an OPEC+ joint technical committee is meeting this week to discuss the impact of the coronavirus outbreak in the oil markets. The meeting is taking place in Vienna and many expect the panel to recommend further supply cuts as well as an extension of the current output cuts.
Oil markets slid on Monday. By 9:49 GMT the Brent oil futures went down by 0.74 percent, falling to the 56.20 level. Conversely, West Texas Intermediate (WTI) crude oil futures went down by 0.16 percent, at 51.48. On Sunday, Brent oil futures lost 3.90 percent, followed by the WTI crude oil futures, which lost 0.99 percent.