Oil dives to 7-week low ahead of EIA weekly report

Oil prices continued to drop as the US market opened on Thursday, deepening losses for the fourth straight day, diving to a 7-week low, as concerns mounted about the spread of the Chinese coronavirus and its effect on oil demand in the world's largest importer, oil prices also fell under pressure from a surge in the US crude inventories according to preliminary data by the American Petroleum Institute, while the EIA will release it weekly report later today.

US crude fell to $55.59 (lowest since December 3), after opening at $56.05, with today's high at $56.25.

US crude closed lower by 3.8% yesterday, its third straight daily loss, and the biggest since January 8, on fears over the Chinese virus.

The new influenza-like coronavirus in China led to 17 fatalities, and nearly 600 people infected, prompting the Chinese authorities to lockdown Wuhan city, which has a population of 11 million people, as it is believed that the virus started in that city .

This mounted the concerns about a spread of the Chinese virus into a global epidemic similar to SARS in 2002/3, which has led to a slowdown in the Chinese economy, and the global travel movements.

The American Petroleum Institute (API) revealed yesterday in preliminary data the US crude inventories rose by 1.6 million barrels during the week ending in Jan. 17, beating forecasts of 0.5 million barrels.

While the US Energy Information Administration (EIA) will release today the official data on inventories and production levels in its weekly report, with forecasts for inventories to drop by 0.1 million barrels, while in the last week's report the production levels rose to the all-time record of 13.0 million barrels per day.