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EDITOR IN CHIEF- ABDULLAH BIN SALIM AL SHUEILI

Oil falls 4pc amid a broad decline in global markets

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TOKYO: Oil prices fell for the second straight day on Thursday amid a broad decline in global markets after the United States banned travel from Europe following the World Health Organization’s decision to declare the coronavirus outbreak a pandemic.


The slump in oil is being compounded by the threat of a flood of cheap supply as Saudi Arabia promised to raise output to a record high in its standoff with Russia.


Brent crude LCOc1 was trading down $1.65, or 4.6 per cent, at $34.14 by around 07:18 GMT, a little above earlier lows. The contract fell nearly 4 per cent on Wednesday.


US crude CLc1 was down $1.38, or 4.2 per cent, at $31.60 after also dropping 4 per cent in the previous session.


The two benchmarks are down about 50 per cent from highs reached in January and had their biggest one-day declines on Monday since the 1991 Gulf War after Saudi Arabia launched a price war.


The price difference between near-term and longer-term Brent prices LCOc1-LCOc6 also widened to the most in five years, prompting traders to fill tankers with oil to store for later delivery when they are betting prices will be higher.


Global shares were also down on Thursday after US President Donald Trump said the United States will suspend all travel from Europe as he unveiled measures to contain the coronavirus epidemic.


The travel ban, which excludes Britain, will hit US airlines “extremely hard”, their industry association said.


The surprise move is likely to mean a further drop in demand for jet and other fuels in an already battered oil market, although just how much is hard to quantify.


“This is what a large positive supply shock and a large negative demand shock looks like,” said Lachlan Shaw, head of commodities research at National Australia Bank in Melbourne.


— Reuters


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