Crude futures tanked as soon as markets opened on Monday, following news over the weekend that the deadly China coronavirus had flared up in Italy, Iran and South Korea.

Italy reported 152 confirmed cases of the coronavirus over the weekend, the largest in Europe.

South Korea over the weekend reported more than 600 confirmed cases and six deaths from the coronavirus, the worst spread of the contagion outside China.

Iran on Sunday reported a cumulative 43 confirmed cases of Covid-19, most of them in the holy city of Qom.

Crude was back on a slippery slope on Friday after continuing to continuing to build on the previous week’s gains through Thursday, putting paid to expectations that it was finally clawing its way out of the coronavirus trough.

While prices may not go in search of a fresh bottom below the 13-month lows of $53.27 for Brent and $49.57 for WTI notched on February 10, we expect the trek upward to be slow and jagged in the coming days and weeks.

An exception to that would be the OPEC/non-OPEC combine delivering a bullish surprise with unexpectedly large production cuts at its meeting in early March, or COVID-19 staging a miraculously hasty retreat, neither of which is our base scenario at this point.

The sentiment meter in our latest Bulls & Bears report says:

• Mildly Bearish for the next several days. We believe most of the panicky sell-off from the deadly China coronavirus outbreak is done. Crude appears be consolidating after sliding 15-17% from the highs of Jan 6 to close at three-month lows on Jan 29. But sentiment is likely to remain somewhat bearish until the spread of the coronavirus abates.
• Neutral for Feb-Apr. The double-whammy of lingering US imports tariffs and the coronavirus is expected to slow down the Chinese economy, evidence of which will keep sentiment in the oil market subdued. However, we expect OPEC+ to tighten output further to put a floor under prices, should there be clear signs of a demand slump and supply overhang in the market.

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