(Bloomberg) -- Oil held losses near $50 a barrel after falling into a bear market as OPEC and its allies gather Tuesday for an urgent meeting to assess the impact of the coronavirus on global demand.
Futures have slumped more than 20% since early January as the virus curtailed demand in a market awash with crude. Technical experts from the OPEC+ coalition will meet in Vienna and their assessment on the outbreak may determine whether the alliance convenes a ministerial meeting later this month to consider new output cuts. Commodities in China plunged for a second day as the nation takes steps to adjust to a slower rate of economic growth.
The virus has upended trade flows and probably led to a 20% cut to China’s oil demand as the crisis hits the world’s biggest commodities importer. Refineries are curbing operations and shutting plants, while the nation’s top processor is seeking to re-sell millions of barrels of West African crude it no longer needs because of the squeeze to consumption.
“The coronavirus is prompting growth downgrades around the world and oil demand is taking a big hit,” said Howie Lee, an economist at Oversea-Chinese Banking Corp. in Singapore. “It looks highly likely to me that OPEC+ will extend its production cuts from March to June. It’s a logical response given how depressed prices are now.”
West Texas Intermediate for March delivery added 25 cents to $50.36 a barrel on the New York Mercantile Exchange as of 10 a.m. in Singapore after falling as much as 0.9% earlier. The contract slumped 2.8% to the lowest since January 2019 on Monday. Brent gained 0.2% after dropping 3.8% on Monday.
China’s benchmark futures plunged amid a rush by traders to exit positions. Crude in Shanghai tumbled more than 7%, while iron ore and rubber slumped.