Oil prices sink to lowest in over a year, biggest weekly drop since 2016

Oil prices slumped for a sixth day in a row on Friday to their lowest in more than a year, causing futures to drop by the most in a week since 2016, as the spread of coronavirus stoked fears that a slowing global economy would hit energy demand.

The coronavirus spread further, with cases reported for the first time in six countries across three continents, battering markets and leading the World Health Organization (WHO) to raise its impact risk alert to "very high."

The most active Brent future for May delivery fell $2.06, or 4.0 per cent, to settle at $49.67 a barrel, its lowest since July 2017.

Brent futures for April delivery, meanwhile, lost $1.66, or 3.2 per cent, to settle at $50.52 a barrel, while US West Texas 

Intermediate (WTI) crude fell $2.33, or 5.0 per cent, to settle at $44.76. That is the lowest closes for both Brent and WTI since December 2018.

For the week, Brent lost almost 14 per cent, its biggest weekly percentage decline since January 2016, while WTI fell over 16% in its biggest weekly percentage drop since December 2008.

Coronavirus panic also sent global stock markets and industrial and precious metals prices tumbling, with losses amounting to $5 trillion.

"Virtually all fixed assets are attempting to accurately discount GDP and demand impact from the coronavirus that still appears to be spreading rather than contracting," Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois, said in a report.

Mainland China reported 327 new cases, the lowest in more than a month, but the outbreak surged elsewhere.

The latest WHO figures indicate over 82,000 people have been infected, with over 2,700 deaths in China and 57 deaths in 46 other countries.

Benchmark Brent crude's slump should focus minds on next week's meeting between the Organization of the Petroleum Exporting Countries and allies including Russia, collectively known as OPEC+.

"OPEC+ will have to deliver a deeper production cut as oil prices remain in freefall," Edward Moya, senior market analyst at OANDA in New York, said in a report.

Several key OPEC members are leaning towards a bigger than previously expected oil output cut, four sources with knowledge of the talks said.

Saudi Arabia, the biggest producer in OPEC, and some other members are considering a cut of 1 million barrels per day (bpd) for the second quarter of 2020, up from an initially proposed cut of 600,000 bpd, the sources said.

OPEC+ is due to meet in Vienna over March 5-6.