Oil prices indicated that global markets face a renewed surplus as Asia’s coronavirus hits demand, with discounts on prompt supplies emerging across the Brent futures curve.

Brent crude has moved into a full “contango” structure in which each monthly contract is cheaper than the next, suggesting a glut in supply. Global demand estimates are being cut as the outbreak causes severe economic disruption in China, while OPEC is hesitating over steps to support prices.

As the glut begins to accumulate, leading oil traders such as Vitoil SA, Royal Dutch Shell (LON:RDSa) Plc and Litasco SA are seeking to hoard crude on vessels at sea. One Chinese energy company has invoked a legal clause to avoid taking delivery of liquefied natural gas.

Brent crude for April settlement rose 1.3% to $53.96 a barrel on the ICE (NYSE:ICE) Futures Europe exchange in London as of 10:31 a.m. London time, supported by a recovery in equity markets. The U.S. benchmark, West Texas Intermediate, was at $50.20 on the New York Mercantile Exchange.

Source : Bloomberg