Oil prices rebound despite coronavirus fears

Oil prices rebound despite coronavirus fears

Oil prices continued a recovery from three-month lows on Wednesday, trading close to $54 per barrel as investors reassessed the threat to demand by the coronavirus epidemic.

The virus, known by many as corona, was first reported in the Chinese city of Wuhan and has killed more than 100 people and infected over 6,000 people globally, most of them in China. Symptoms include coughing, fever, and breathing problems.

“It’s a technical rebound after dropping below the $60 levels. The risk of the coronavirus is hard to quantify at these levels but we believe we are not out of the woods yet in terms of the risk on the Chinese economy,” said Majd Dola, equity portfolio manager at FAB.

“Hence we believe there is another chance of a leg down for risky assets,” he added.

Investors reacted poorly to the news of the coronavirus outbreak, with global equity markets and commodities trading down through most of the week.

Saudi Energy Minister Prince Abdulaziz bin Salman said on Monday that the world’s largest oil exporter was closely monitoring the coronavirus epidemic and its impact on the market.

“The current impact on global markets, including oil and other commodities, is primarily driven by psychological factors and extremely negative expectations adopted by some market participants despite its very limited impact on global oil demand,” Prince Abdulaziz said.

Meanwhile UAE Minister of Energy Suhail al-Mazroui on Monday urged markets to not overreact to the possible impact of the coronavirus on oil demand.

In a statement al-Mazroui added that he is confident in the ability of China and the international community to bring the outbreak under control.

The Saudi Stock Exchange’s (Tadawul) benchmark index, the TASI, closed Wednesday up 0.24 percent. The DFM’s headline index followed suit, closing 0.46 percent up, while the Kuwaiti bourse index ended trading up 0.49 percent, and the Bahrain Bourse closed up 0.79 percent.

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