Brent came into Monday nursing its largest weekly decline since December of 2018.
The global benchmark tumbled more than 6% last week, thanks in no small part to worries that the spread of the deadly Wuhan virus will undercut the nascent recovery in global growth, thereby denting demand.
As we wrote Friday afternoon, it wasn’t so long ago (less than three weeks, in fact) that market participants were pondering a dramatic oil spike tied to Mideast turmoil. As Friday’s protests in Iraq attest, that tumult is still a work in progress, but crude’s rally is most assuredly not.
Fast forward to Monday and things got considerably worse.
Futures dove more than 3% after a weekend defined by scary-sounding pandemic headlines. The market is now back to levels last seen in October.
The slide is bringing out the big names, including Prince Abdulaziz bin Salman. “The current impact on global markets, including oil and other commodities, is primarily driven by psychological factors and extremely negative expectations adopted by some market participants despite its very limited impact on global oil demand”, the Saudi energy minister said of the market’s reaction to the spread of the virus.
The kingdom promises it’s “closely monitoring” the situation, but for right now, Riyadh’s view is that the epidemic will have only a “very limited impact” on global demand.
Fingers crossed on that.
Saudi shares fell the most since the Soleimani assassination on Monday. It was the fifth straight down day, the worst such streak since October.
Aramco continues to trade near post-IPO lows.
The UAE, meanwhile, says it’s important “not to overstate the impact of coronavirus on oil demand”.
In other words: Nothing to see here. Just seven-dozen dead and another 2,100 infected by a deadly virus that’s still being described by experts as “a mystery”.