WASHINGTON (DTN) -- Oil futures on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange continued lower in pre-inventory trade Wednesday, with front-month West Texas Intermediate futures trading below $50 after U.S. Center for Disease Control warned of an inventible global coronavirus pandemic as new infections continue to surge across Europe and Asian countries, shattering commerce and economic activity.
In early trading, NYMEX April West Texas Intermediate futures dropped $0.69 near $49.21 per barrel (bbl) and ICE April Brent declined $1.07 to $53.88 bbl. April Brent held a $0.50 premium to the May contract ahead of expiration Friday afternoon. NYMEX March RBOB futures plunged 4.89 cents at $1.4835 gallon, expanding its discount with the April contract to 10.92 cents ahead of expiration Friday afternoon. NYMEX March ULSD futures dropped 4.71 cents to a $1.5214 gallon 31-month spot low.
Early Wednesday trade brought even more losses for the oil complex, as mounting fears of a global coronavirus pandemic sent prices tumbling for the third straight session ahead of U.S. weekly inventory data.
Markets expect another weekly build in nationwide crude oil supply at around 3.9 million bbl, which would be the fifth consecutive increase, while products stocks are projected to have declined on the week. American Petroleum Institute, an industry group, reported on Tuesday domestic crude stocks rose by a smaller-than-expected 1.3 million bbl last week, which if confirmed by government data, could lend some support to the oil complex in afternoon trade. API data also showed gasoline stocks increased by 74,000 bbl during the reviewed week and distillate fuel supply declined 706,000 bbl.
WTI broke below $50 bbl in afternoon trade Tuesday after U.S. top health officials warned of a looming COVID-19 pandemic with unavoidable outbreaks domestically. CDC expects the virus to circulate through local communities in the coming weeks and called for businesses and schools to plan for potential outbreaks.
So far, U.S. has only 14 confirmed cases and additional 40 quarantined from the Diamond Princess cruise ship. However, Europe continues to report a slew of new coronavirus cases with France confirming the second coronavirus death and Italy reporting its 12th death, while Greece confirmed its first coronavirus case. As of Wednesday morning, COVID-19 infections have topped 81,000 and causalities exceeded 2,700.
Global financial markets continued their recent sell-off Wednesday, with declines led by Asian equities. European markets also posted steep losses as investors were alarmed by the seemingly uncontrollable spread of the disease across the European Union. U.S. stock futures dropped again in overnight activity after Dow Jones Industrials plunged more than 1,800 points in less than 48 hours this week.
International Energy Agency said it is likely it will again downgrade its global crude oil demand forecast in the coming weeks, as it sees more risks to economic growth as a result of the latest spike in new infections. Earlier this month, the Paris-based energy watchdog forecasted global oil demand to post a rare 435,000 barrels per day (bpd) quarterly drop during the first three months of the year, driven by contraction in China's fuel consumption.
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