Crude Oil has been on a bearish trajectory since the beginning of the year, and continues its downward trend this week.
WTI Crude plunged below the $50 mark and dropped as low as $45.94 per barrel. This marks a low of almost 6% for the day, and more than 12% for the week. A drop back down to its previous low of $45.52 which it hit in December 2019 is most likely set to happen as the coronavirus continues to directly impact oil prices, but the real question is whether or not it will recover after that, or continue to drop further.
As the price of oil continues to drop, it could impact production around the globe. While some countries such as Saudi Arabia can produce a barrel of oil for as little as $10, for others such as the UK, Australia, and Canada, it can quickly become unprofitable for them if the price of crude continues to drop any further. This would result in long term impacts as well as short, as this does not immediately slow down oil production, but rather discourages the exploration and development of new oil fields.
Crude oil is the world’s most traded commodity, and as a result has been one of the most affected by the coronavirus. China being the largest consumer of oil in the world does not help its cause either. China is beginning to lessen its quarantine restrictions on citizens in affected areas as the number of cases starts to decrease in the country, but large portions of its industry are still closed.
In other parts of the world, the US has braced themselves for the virus to impact them, as a woman in Northern California contracted the illness without coming into contact with anyone known to have the infection, which caused officials to speculate that the disease had spread amongst the US community. California health officials are currently monitoring 8,400 people for symptoms of the virus, ever since 33 people tested positive. After downplaying the effects of the coronavirus in the States just earlier this week, US President Donald Trump will be holding a White House conference to prepare for its spread in the country.
While the spread of the outbreak is continuing to slow down in China, a global pandemic still looks to be on the horizon as more and more countries are reporting new and increased cases. Oil producing countries in the Middle East have also caught the coronavirus as Iran struggles to contain its outbreak. As the country refuses to quarantine infected cities and instead is only restricting domestic travel, they have now reported 26 deaths, with several government officials being infected as well.