Oil prices rebound; coronavirus is a ‘Black Swan’ for energy markets

Oil Prices rebounded from the lowest level in more than a year on Tuesday in Asia, but analysts said the recent coronavirus outbreak remained as a major headwind for the markets.

US Crude Oil WTI Futures rose 1.3% to $50.20 by 12:20 AM ET (04:20 GMT), while international Brent Oil Futures also gained 1.3% to $53.98.

Despite today’s gains, oil markets remained under pressure from worries over weakening demand due to the coronavirus.

In a note sent to clients, Ned David Research said the coronavirus is a “true black swan” for the oil and energy market for this calendar year.

Analyst Warren Pies noted that the outbreak has reduced Chinese demand for oil by 2 million to 3 million barrels per day, which means “the oil market is looking down the barrel at no demand growth for the calendar year, and outright demand contraction is now on the table.”

The firm downgraded its outlook on oil in late January, and warned that there could be more downside ahead.

The number of coronavirus deaths in China rose to 1,016, China’s National Health Commission said, adding that and the number of confirmed cases have topped 42,600.

Last week, the oil markets posted a fifth straight losing week. Combined losses over the five weeks stood at more than 22% for both benchmarks, leaving them in bear market territory.