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Oil slipped below $50 a barrel in London as the fast-spreading coronavirus roiled global markets, intensifying speculation that OPEC and its allies will strike a deal to support prices.
Brent crude for May delivery, the most actively traded contract, lost almost 4 percent as fears over the outbreak sent shares around the world slumping. The market’s price structure has weakened dramatically, tumbling into a contango, while the profits from making products like diesel have also collapsed. Amid the slump, there are signs that OPEC and its allies could be nearing agreement on action to stem the rout before meeting in Vienna next week.
The group’s top official said the cartel and its allies are displaying a “renewed commitment” to reach an accord as the virus puts the world economy on course for its worst performance since 2009. Saudi Arabia has been pushing for deeper production cuts over the last few weeks, but Russia has so far taken a more cautious stance.
One silver lining for markets is that prices are now at a level that may be uneconomic for US shale producers. — Bloomberg.
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