Oil prices have fallen by 10%

Quotes of Brent crude oil yesterday fell 10% amid projections of reduced demand from China due to the spread of coronavirus, lock individual cities and reducing air travel. On the Chinese exchanges in the first day after the holiday, the quotations also went down.

On the China stock market yesterday, the largest in 5 years collapse, stock prices fell by 8%. After the long weekend investors started to work and began to sell securities. The panic intensifies the further spread coronavirus, although experts believe that its impact on the economy will be temporary, so don't expect a new collapse of quotations.

the Futures for Brent oil at the London ICE Futures Europe exchange yesterday fell by 10% to 53,98 $/bbl and at a certain time of bidding, updated 13-month low, however, on the morning of 4 February was restored to 54.72 $/barrel.

March f' ucers of WTI in electronic trading on the new York stock exchange NYMEX fell by 7% to 49.77 $/barrel, but then recovered to 50.5 $/barrel.

According to Bloomberg, with the emergence of a new virus, the demand for oil fell by 3 million barrels/day, accounting for 20% of consumption. This was the biggest shock for the economy since the financial crisis of 2008-2009.

the Experts of Fitch Ratings think the proliferation coronavirus will restrain the growth of demand for oil, which will increase its overproduction on the background of increasing production in the USA, Norway and Brazil. The size of the surplus will depend on the duration of the epidemic and the ability of OPEC+ if necessary, adjust production volumes. The price of oil in 2020 will be unstable and dependent on the geopolitical situation and economic sentiment.

According to Bloomberg, OPEC+ will hold 4-5 February an extraordinary meeting of the technical Committee that was previously planned before the March meeting of OPEC Ministers+.

Bank of Citigroup Inc, one of the three largest U.S. banks, has lowered the forecast oil prices for 69 $/barrel to 54 $/bbl in the first quarter of 2020 and to 68 $/barrel $50/barrel in the second, although noted that the situation remains fragile and will depend on the scope and duration of the epidemic.

the Largest supplier of oil to China is Russia, followed by Saudi Arabia, which may much longer to dump the price to keep up the sales.

the Decline in oil prices increases the pressure on the markets of vegetable oils and corn, which are the main raw materials in the production of biofuels.