Fuel prices set to fall as virus scare may hit demand

NEW DELHI: Local rates of petrol and diesel are set to fall further, after declining about Rs 1.5 a litre in thirteen days, as crude oil slid 4% this week to about $62 a barrel on fears that China’s coronavirus outbreak may hit demand amid copious supplies. The virus, which has infected more than 800 people so far and killed 25, has spread to at least seven other countries.

Markets fear the outbreak would hurt travel, oil demand and economic growth in China, the world’ fastest-growing oil consumer.

Oil steadied on Friday, rising 0.5% to $62.35 a barrel, but was still down 4% for the week. A surprise 405,000-barrel decrease in US crude stockpiles helped push up price on Friday.

Domestic rates of petrol and diesel are based on the 15-day moving average of the international rates of respective fuels – which helps spread spikes and falls over several days.

In Delhi, petrol and diesel were retailed for RS 74.43 and Rs 67.61 a litre, respectively, on Friday. Since January 11, the price of petrol is down Rs 1.58 per litre in the capital while diesel is down Rs 1.56/litre.

The shadow of coronavirus would stay on the oil market for days to come as more information emerges from China on the extent of the outbreak.

The World Health Organisation has declared the situation an emergency.

“(The) selloff on the…flu scare was mollified by a timely decline in US crude inventories,” Stephen Innes, market strategist at AxiTrader, said in a Reuters report. “Oil prices could remain on a slippery slope as traders remain incredibly twitchy about the effects the coronavirus outbreak could have on Chinese GDP and air travel more broadly.”