Crude prices were slumping early Thursday in Asia as fears over a new SARS-like pandemic grew, with China reporting a sharp rise in the number of infections and deaths from the pneumonia-like disease. A World Health Organisation committee meeting on Wednesday delayed its decision on whether to declare the new coronavirus an international emergency and decided to convene again today to take more information on board.

The postponement of the WHO decision keeps the global financial markets on tenterhooks for another day. But in the meantime, cautious investors are laying off risk, going by reports from the ground in Wuhan, where the coronavirus originated in December. The city has been quarantined to contain the spread of the disease, which can be transmitted between humans and has so far claimed 17 lives and infected 571. China is in the midst of its Lunar New Year peak travel season, which has added to concerns over a rapid spreading of the virus.

We don’t know yet whether the deadly coronavirus outbreak in China, which has also been detected in a few neighbouring countries well as the US, is on its way to becoming a pandemic.

But comparisons are being drawn with SARS, the respiratory illness that infected over 8,000 and killed nearly 800 people worldwide in 2003.   

Crude’s plunge this week – which was hovering around a cumulative 5% weekly loss as of Friday morning US time – appeared to be factoring in the worst. 

The sell-off is probably premature and overdone. But markets are not always given to rational thinking. 

The coronavirus outbreak looks like it could get much worse before it is contained. The WHO this week decided against declaring it a global health emergency. But it could still turn into a pandemic.

What does this mean for the oil market? Uncertainty may be here to stay and fears of a fresh blow to oil demand are likely to rule until the disease is clearly in retreat. That could take weeks, if not months.

y 9.30 am Singapore time (0130 GMT), three and a half hours after trade opened for the week on the CME and ICE futures exchanges, crude had calmed down somewhat, to gains of 10-12% versus Friday’s clsoe. Shortly before the markets opened, US President Donald Trump tweeted that he had authorised the release of stocks from the country’s Strategic Petroleum Reserve if necessary, to keep the markets

Shortly before the markets opened, US President Donald Trump tweeted that he had authorised the release of stocks from the country’s Strategic Petroleum Reserve if necessary, to keep the y 9.30 am Singapore time (0130 GMT), three and a half hours after trade opened for the week on the CME and ICE futures exchanges, crude had calmed down somewhat, to gains of 10-12% versus Friday’s clsoe. markets