Crude oil prices cut down on Friday in Asia Pacific trade with the market still depressed by worries linked to the coronavirus that has killed at least 2000 in the mainland China and beyond.
South Korea stepped up measures to contain the contagion following a second day of sharp rises in infections, a development Prime Minister Park Ching Sye-kyun described as an ‘emergency.’
Two cities in the south of the country have been declared ‘special care zones,’ where increased precautions are urged.
China too saw an increase in cases even as it says that workers in key export production areas are now returning to work after a hiatus caused by the outbreak.
Be that as it may global investors are still casting nervous glances at supply chains dependent on Chinese manufacturing and wondering whether they will buckle before matters return to normal, especially in the European automotive sector.
All of the above feeds into suspicions of weaker demand for energy.
The oil market has long suspected that the Organization of Petroleum Exporting Countries and allies including Russia, the so-called ‘OPEC Plus’ group, would deepen and extend production cuts in response to just these suspicions.
However, Russia has always been reluctant and its Energy Minister Alexander Novak seemed to cast doubt on any meeting of the group before the scheduled March conference.
This suggests that no action will take place before then, and that there may yet be debate over whether any happens at all.
Gold prices unsurprisingly boosted by the general retreat from risk seen Friday, although its notable that Chinese stock markets managed to hold up.
The metal rose to new seven year highs on Friday having added more than $200 per ounce since the coronavirus story broke last month.
Financial markets as a whole will look to Purchasing Managers Index numbers for February from around Europe and North America for the remainder of Friday. These data tend to give an early steer on a given month’s economic performance.