Oil prices slid into bear-market territory on Monday, highlighting investors’ growing concern that China’s deadly coronavirus will hurt the global economy by reducing demand for gasoline, diesel and jet fuel in an already well-supplied market, The Wall Street Journal reported.
The declines capped an eventful day in markets. President Xi Jinping of China delivered a speech Monday describing the outbreak as a major test of the country’s system of governance and vowing consequences for officials who shirk responsibility in tackling the crisis. U.S. health authorities, meanwhile, reported a second case of the coronavirus being passed from one person to another in the country as they raised the number of the nation’s confirmed cases to 11.
The prospect of canceled flights, closed international borders, locked-down cities and idled factories in China, which is the world’s biggest oil importer, have rattled financial markets in recent sessions, sparking swings in stocks, bonds and commodities around the world. Many investors remain braced for greater volatility ahead.
The magnitude of the concern is such that Saudi Arabia’s push for further production cuts among members of the Organization of the Petroleum Exporting Countries failed to buoy oil prices on Monday.
Though prices briefly ticked higher after The Wall Street Journal reported that Saudi Arabia was advocating a short-term curtailment to combat declining demand related to the outbreak of the virus, they quickly resumed their fall.
Global and U.S. prices finished Monday in bear-market territory, generally defined as a 20% decline from a recent peak. The fall marked a rapid reversal from three weeks ago, when escalating tensions in the Middle East drove international prices above $70 a barrel.