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Oil prices fall 2% on demand concerns as the virus

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Reference:CGTN | Updated: 24 February 2020

Oil prices tumbled more than two percent on Monday as investors worried about a hit to demand from the virus outbreak, which is spreading rapidly outside China.

Brent crude fell by 1.50 U.S. dollars or 2.5 percent to 57.00 U.S. dollars a barrel by 2332 GMT. U.S. crude futures fell by 1.26 U.S. dollars or 2.3 percent to 52.12 U.S. dollars.

Concerns about the virus grew on Sunday after sharp rises in infections in South Korea, Italy, and Iran.

South Korea's government put the country on high alert after the number of infections surged to over 600 with six deaths, while in Italy, officials said a third person infected with the flu-like virus had died, as the number of cases jumped to above 150 from just three before Friday.

"We should not underestimate the economic disruption as a super spreader could trigger a massive drop-in business activity around the globe of proportions the world has never dealt with before," said Stephen Innes, chief market strategist at AxiCorp.  

China, the world's largest energy consumer, will adjust policy to help cushion the blow to the economy from the virus outbreak that authorities are still trying to control.

Meanwhile, Saudi Arabia's Energy Minister Prince Abdulaziz bin Salman described as "nonsense" a media report that Riyadh is considering a break from the OPEC+ alliance with Russia.

His comments followed a Wall Street Journal report that said Saudi Arabia was considering leaving the OPEC+ alliance as the virus outbreak contributes to a drop in global oil demand.

In the United States, the oil rig count, an indicator of future production, rose for a third straight week. Drillers added one oil rig last week, bringing the total count to 679, the highest since the week of December 20, energy services firm Baker Hughes Co said.

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