WASHINGTON (DTN) -- Nearby delivery month crude and product futures on the New York Mercantile Exchange and Brent contract on the Intercontinental Exchange settled lower in afternoon trade Thursday, depressed by a fresh wave of selling in equity markets amidst the growing number of coronavirus cases in the United States, as traders await official response from Russia on proposed 1.5 million barrels per day (bpd) cuts from Organization of the Petroleum Exporting Countries and non-OPEC.
Thursday's session saw another wild swing in equity markets, with the Dow Jones Industrial tumbling over 1,000 points and S&P 500 down 4% as investors grew increasingly unnerved over new and growing cases of COVID-19 in the U.S. California Governor Gavin Newsom declared a state of emergency on Wednesday "to help the state prepare for broader spread of COVID-19" after a first coronavirus-related death and 53 confirmed cases in the state. The number of infections in New York also doubled overnight to 22, with health officials scrambling to control the outbreak.
Fears of coronavirus spreading in the world's largest economy are likely to pressure global markets further until investors get a sense the virus is finally receding. International Monetary Fund said Wednesday that global economic slowdown resulting from the coronavirus epidemic will be more severe than previously thought, with this year's growth slipping below 2.9% under any scenario.
In the market-on-close trade, April West Texas Intermediate dropped $0.88 to $45.90 per barrel (bbl) settlement and ICE May Brent contract tumbled $1.14 for a $49.99 bbl settlement. Weighed down by losses in crude futures, products moved sharply lower in afternoon trade, with the front-month ULSD contract leading the declines. NYMEX April ULSD futures settled down 4.47 cents at $1.4885 gallon and NYMEX April RBOB contract dropped 3.37 cents to $1.5218 gallon.
Crude futures finished with a loss of nearly 2% on Thursday even after OPEC members agreed on a collective 1.5 million bpd production cut through the end of 2020 as a temporal measure to bolster the market. Under the new agreement, OPEC members will share 1 million bpd in production cuts, with 10 non-OPEC producers led by Russia shouldering the additional 500,000 bpd. The new deal, however, is still conditioned on consent from the Russian delegation. Russia's Energy Minister Alexander Novak will not be back at negotiating table until Friday, when OPEC producers are set to finalize the deal with non-OPEC producers. Novak has not made public statements during his trip this week to Vienna, keeping the door open for the possibility the deal might not be reached. Earlier reports indicated Moscow agrees to cut in principle, but undecided on exact numbers.
The proposed cuts will come on top of exiting 1.7 million bpd agreement finalized in December and Saudi Arabia's volunteered reduction of 400,000 bpd. Furthermore, OPEC recommended production levels agreed to in December to last through the end of 2020 as an extraordinary measure to halt the recent slide in oil prices.
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