Coronavirus: Oil holds steady even as outbreak continues to have impact

This comes a week after oil rose for the first time since early January on hopes that Chinese measures would lead to improving demand

China’s coronavirus epidemic continues to remain a concern globally with the outbreak now claiming at least 1,770 lives. The concerns weighed heavy especially since China is the world's largest oil importing country.

Oil prices remained steady on Monday as worries over the economic fallout of the outbreak were balanced-out by investor hopes that the Organization of the Petroleum Exporting Countries (OPEC) and its allies will approve a proposal to further cut production to tighten global supplies and support prices.

This comes a week after oil rose for the first time since early January on hopes that Chinese measures amid the outbreak that have already reportedly affected 70,548 people would lead to recovery in oil demand. 

As Hubei province, the epicenter of the outbreak, reported a slowing rate of new infections, Communist Party officials urged the country to push towards meeting its economic targets for 2020.

Taking a cue from China’s continued efforts to curb the outbreak, emerging markets clocked in a rise in gauges of stocks, bonds and currencies. Raw materials, meanwhile, had their best week this year.

The World Trade Organization (WTO), however, was less optimistic in its outlook. It warned that global trade is likely to remain weak in the coming months over disruptions in movement of goods following fears of the virus risk.

“The slow start could be dampened further by global health threats and other recent developments in the first few months of the year, which are not yet accounted for in the barometer’s best-available historical data,” the WTO said in the report.

This was perhaps best shown by the sharp fall in Indonesia’s palm oil exports. The decline was on account of falling demand for vegetable oil in China in the aftermath of the outbreak. 

Indonesia has exported 84,000 tonnes of palm oil so far this month, compared to 371,000 tonnes in the year-ago period, data from the ministry showed.

In January, its exports to to China stood at 483,000 tonnes.

Coronavirus’ India impact

India’s poultry industry did feel the pinch of the epidemic as rumours linked spread of the virus with consuming chicken. The sector posted $182 million in losses in three weeks as prices were nearly halved following heavy speculation on social media. 

Authorities in Maharashtra, meanwhile, called for the police to act against anyone spreading these rumours.

Vasant Kumar Shetty, president of the Poultry Breeders Welfare Association in Maharashtra, said: "The industry has been losing 120 million rupees per day due to lower prices."

Meanwhile, Union minister Dharmendra Pradhan Monday asked steel makers to step up production in the aftermath of the outbreak. He added that India should target a larger share of the global market as the impact of the virus will continue to be felt on global steel for the next 2-3 years. 

"When some markets in the globe face pressure, its positive reflection is felt in some other markets. This is an automatic (natural) law. India occupies number two slot in steel production. From capital goods to finished products - how can we derive benefit - we are holding talks with stakeholders," Pradhan said

Chinese Parliament, Tokyo marathon hit by virus

In a rare move, the Chinese government is said to be considering postponing its annual parliament session. 

The National People’s Congress is scheduled to hold the session in the Chinese capital of Beijing on March 5.

Organisers of the Tokyo marathon were forced to cancel the amateur portion of event over coronavirus, a move that affects up to 38,000 runners. The move comes amidst the administration’s efforts to discourage large gatherings in the country.

"We reached the conclusion that unfortunately it is difficult to organise the event... after several cases (of the virus) were confirmed in Tokyo," the Tokyo Marathon Foundation said in a statement.