Oil prices dropped Thursday following surprise travel constraints imposed by U.S. Prez Trump in an attempt to stop the spread of coronavirus after the World Health Organization called the outbreak a pandemic.
The tank in oil is being compounded by the threat of a flood of low-cost supply after Saudi Arabia and the United Arab Emirates (UAE) stated they might raise production in a standoff with Russia.
Brent crude was down $2.46, i.e., 6.9%, at $33.33. U.S. crude was down $2.05, i.e., 6.2%, at $30.93.
Global stocks took a blow after U.S. Prez Donald Trump stated the U.S. would suspend all travel from Europe as he introduced measures to include the coronavirus.
The oil market was taking the decision very negatively due to the impact on jet fuel demand and expectations for business activity and financial growth, stated Bjoernar Tonhaugen, chief of oil markets at energy consultant Rystad.
The two benchmarks are down nearly 50% from highs achieved in January. They had their biggest one-day drops since the 1991 Gulf War Monday after Saudi Arabia ignited a price war.
The six-month Brent contango spread from May to November widened to as low as $6.40 per barrel.