Meanwhile, OPEC is reportedly close to agreeing to deeper cuts: File Image/PixaBay
With the Organization of the Petroleum Exporting Countries (OPEC) inching closer to enacting deeper production cuts to counter the economic impact of China's coronavirus, crude prices on Tuesday climbed nearly 1 percent - but at least one expert lamented that the hysteria surrounding the virus is almost completely media driven.
West Texas Intermediate rose 43 cents, or 0.9 percent, to settle at $47.18 per barrel, while Brent dropped 17 cents to $51.73 per barrel.
However, the gains were severely capped by the U.S. Federal Reserve stating that it was cutting rates by a half percentage point to a target range of 1 to 1.25 percent - a move traders regarded as a signal that the virus's effect on the economy was more serious than initially thought.
Dr. Drew Pinsky
The entire problem we are having is due to panic, not the virus
Scott Shelton, an energy broker with ICAP, remarked, "I think the rate cut was expected to happen this week and while it adds liquidity to the market, it does little to encourage anyone to book a flight anywhere.
"I think the market effects are short lived when it comes to the price of oil."
Meanwhile, OPEC and its allies on Tuesday recommended cutting oil output by an extra 1 million barrels per day (bpd) and suggested that Russia and Saudi Arabia were moving closer to a deal to prop up prices.
As far as Mike Wirth, chief executive officer of Chevron Corp., is concerned, such initiatives are necessary because, as he told Bloomberg television, "There's no doubt demand is off significantly, certainly more in certain regions than in others, but globally we've seen demand really come off."
That said, one expert thinks media is largely to blame for the growing panic over the virus: addiction specialist Dr. Drew Pinsky said, "Essentially the entire problem we are having is due to panic, not the virus.
"I was saying this six weeks ago: we have six deaths from the coronavirus, 18,000 from the flu, (so) why isn't the message, 'Get your flu vaccine'"?
He added, "The entirety of the problem now is that people are being pushed into bankruptcy: travel is down, the supply chain is being interrupted because of panic."