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World In Panic: Crude Oil Prices Drop Further, As Europe Locks Down Against Coronavirus Spread

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World In Panic: Crude Oil Prices Drop Further, As Europe Locks Down Against Coronavirus Spread

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On March 16th, in total, almost 170,000 people have been infected by the coronavirus across the world and 6,509 have died, with cases and deaths outside China overtaking those in the country where the outbreak began

For a while now, Italy has become the country with the most active COVID-19 cases in the world, surpassing China by a large margin.

In total, as of March 16th, Italy has had 24,747 cases, out of them 2,335 people have recovered, and 1,809 have died.

The active cases currently sit at 20,603, out of which 1,672 are in serious or critical condition.

World In Panic: Crude Oil Prices Drop Further, As Europe Locks Down Against Coronavirus Spread

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Other countries in Europe, such as Spain, Germany, France, Switzerland, UK, Norway, the Netherlands, Belgium, Sweden and Austria have reported upwards of 1,000 cases.

Spain and France have the most fatalities, at 297 and 127, respectively.

Most European countries announced a lockdown, with borders being closed for foreigners for several weeks, and only groceries, pharmacies, banks and gas stations working.

In the US numbers are growing, as President Donald Trump told Americans to “relax” and that they’re “doing great.” And urged them not to resort to panic buying.

“You don’t have to buy so much,” the US president said during a press briefing at the White House on the evening of March 15th, adding that people should “take it easy. Just relax.”

It should be mentioned that in the locations with a lockdown, cases are likely to increase in the next several days, and then as the results of social distancing become more visible, cases are also likely to drop, as well as recoveries increase, but this will take several weeks, in the best case scenario.

In the Netherlands, the government announced a lockdown which led to massive queues in front of coffee shops, with people attempting to stockpile marijuana, instead of toilet paper as it has become fashionable in the US and Australia.

The situation is such that even ISIS issued a travel advisory to terrorists, telling them not to travel to Europe and carry out attacks, because they could catch coronavirus.

“Healthy people should refrain from entering virus-hit states, and infected people should not exit them,” a list Aymenn Jawad Al-Tamimi says was published by ISIS mouthpiece al-Naba newspaper.

The list, titled “directives to deal with the epidemic,” includes tips such as covering your mouth when coughing and sneezing, and washing your hands regularly.

ISIS fighters should also remember that “illnesses do not strike by themselves, but by a decree from God,” one of the directives stated.

At the same time, the spreading of the virus has led to a massive reduction in oil demand, and a further reduction in crude oil prices, which Riyadh propagates forward with its aggressive discount policy in its price war with Moscow.

On March 16th, futures in London fell as much as 6%, after plunging by a quarter in the previous week – the market’s biggest weekly drop since 2008.

Brent crude for May slid US$1.87, or 5.5%, to US$31.98 a barrel. Futures fell 25% in the previous week to US$33.85, the largest weekly drop since December 2008. West Texas Intermediate for April delivery dropped 4.8% to US$30.22 a barrel on the New York Mercantile Exchange.

The sharp slow down in activity brought on by the virus is being compounded by a potential flood of supply in April, with top producers Saudi Arabia and Russia pledging to ramp up production. The Kingdom doubled down on the war for market share by sending a wave of crude to Europe, Russia’s traditional market, further dimming the likelihood of a reconciliation.

The concurrent demand supply shocks hitting the oil market appeared to prevail over efforts to shore up the global economy. The Federal Reserve on Sunday cut its benchmark rate by a full percentage point to near zero and will boost its bond holdings by at least US$700 billion (S$989.6 billion). That followed President Donald Trump on March 13th announcing the US government would buy oil to fill its strategic petroleum reserve.

“The market is trying to weigh up between the Fed rate cut, quantitative easing and the fact that the situation is a lot worse than we all thought,” said David Lennox, Resources Analyst at Fat Prophets by phone. “We’ve seen that huge panic sell-off, so it could be that there is limited downside from here.”

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