Platts reduced its forecast for Chinese demand by 2.9 million barrels per day this month, with expectations from Chinese refiners to cut consumption by 2.6 million barrels per day.
The report promised that the spread of the Coronavirus outside China scares the markets, which made the US manufacturing PMI fell to its lowest level in six months in February in light of the continued focus in the market on the concerns related to the destruction of demand.
He pointed out that the very high rate of HIV infections in South Korea shook investor sentiment in the region overnight, and this seems to have spread throughout Europe and now in the United States.
The report quoted data from the Swiss Investment Bank that oil demand in China is likely to average 12.1 million barrels per day during the first quarter, which is about 1.3 million barrels per day, or 10 percent, down from earlier estimates.
He pointed out that the Coronavirus added a new negative dimension to oil markets, at least during the first quarter of this year, during which oil demand will witness a significant decrease in China, where economic activity stops, and its effects are likely to extend to the global economy.
He pointed to the Swiss Investment Bank reduced its forecast for the level of global demand during the current year by 450 thousand barrels per day, or 0.4 percent, under the influence of a large-scale travel ban in China to contain the devastating virus.
Oil prices fell by about 1 percent at the end of last week due to renewed fears of demand being affected by the economic repercussions of the "Corona" outbreak, while "OPEC" and its allies seemed to be in no hurry to curb production.
The latest signs of HIV infection in Hubei Province, where the outbreak in China has sparked a sell-off in various financial markets, while G20 policymakers head to Saudi Arabia for talks on the global economy.
According to "Reuters", Brent crude fell more than 2 percent, and closed at $ 58.50 a barrel, down 81 cents, equivalent to 1.4 percent, while the settlement price in US crude futures closed 50 cents, or 0.9 percent, to $ 53.38.
"We can say that the uncertainty surrounding the Coronavirus has come back violently ... We must acknowledge that we are dealing with an even greater demand shock since the financial crisis ... until we see China returning to work," said Olli Hansen, director of commodities strategy at Saxo Bank. The virus will be the main focus.
There is no sign of a solution to the conflict in Libya, which has led to the closure of its ports and oil fields, while US sanctions on a unit of the Russian state oil giant, Rosneft, may further reduce crude supplies from Venezuela, renewing concerns about global oil supplies.
Markets remained unaffected by the suspension of the export of most Libyan oil after the disruption of export ports, as Libyan oil production decreased since January 18.
And oil production in Libya is currently about 120 thousand barrels per day, according to the latest figures issued by the National Oil Corporation, which was reporting ten times greater production a little over a month ago, reaching 1.2 million barrels per day, mainly exported to Spain, Italy, France, and Germany, According to analyst Tamas Varga of PVM Oil Consultants.
This figure is supported by the latest monthly report issued by the Organization of Petroleum Exporting Countries (OPEC), which indicated an annual rate of 1.097 million barrels in 2019 and 1.140 million barrels in December.
"Supply disruptions are helping to mitigate the impact of the virus, but it is probably too early to believe that we have passed the most severe economic fallout," said Stephen Ennis, chief market analyst at Axi Corp.
On the other hand, the Institute of International Finance believes that an outbreak of the Coronavirus may reduce demand for oil in China and other Asian countries, pushing crude prices down to $ 57.
Garbis Iranian, chief economist for the Middle East and North Africa in the Middle East at the institute, said that before the outbreak of the Coronavirus, we assumed that oil prices would average $ 60 this year, compared to $ 64 last year.
He continued: "It is highly likely that we will review our forecasts for the whole year, to reach $ 58 or $ 57, depending on developments related to the Coronavirus."
Iranian indicated that the outbreak could weaken China's economic growth by 0.5 to 0.7 percent, saying that would have a major impact on crude prices.
He added that if the economic growth rate of China reaches 5 percent, this will lead to major repercussions on oil, as Chinese demand for oil may drop by about 400 thousand barrels per day, and that other Asian countries will witness further demand reduction.
Iranian said that the total global demand growth, instead of becoming 900 thousand barrels per day, can range from 300 to 400 thousand barrels per day.
