After five consecutive weeks of decline in oil prices, the longest streak of weekly drops since 2018, WTI and Brent crude decreased by 17.59 percent and 17.47 percent, respectively, so far this year.
WTI closed the week at 50.32 U.S. dollars a barrel on the New York Mercantile Exchange, while Brent crude finished the week at 54.47 dollars a barrel on the London ICE Futures Exchange, hitting the lowest marks since January 2019.
Oil prices continued the downtrend as the novel coronavirus (2019-nCoV) pneumonia outbreak clouded the demand outlook, and the market awaited the decision whether the Organization of the Petroleum Exporting Countries (OPEC) and its allies would further cut production.
The market was concerned about a potential shortage of crude oil. On Wednesday, oil prices advanced on hopes that the OPEC and its allies would further curb oil production, although the U.S. Energy Information Administration (EIA) reported a build of 3.355 million barrels of crude oil inventories during the week ending Jan. 31, which was more than an expected increase of 2.831 million barrels, implying weaker demand and bearish for crude prices.
Anas Alhajji, an energy-markets expert based in Dallas, U.S. state of Texas, told Xinhua, "Markets were looking for large cuts, especially that a couple of news organizations have erroneously reported a large drop in Chinese oil demand because of the coronavirus."
He said, "The objective of OPEC and its allies is to prevent a large build in inventories in the first half so they can decline significantly in the second half."
Meanwhile, the U.S. Dollar Index closed the week at its highest since October 2019 after five consecutive days of increase. Analysts expected the index will test the 99.00 level next week. A higher index makes the U.S.-dollar-sensitive crude oil more expensive for foreign buyers.
For the upcoming weeks, analysts suggested the focus on a potential tightening in supply. They believed the effects of coronavirus on oil demand would not be considered to have a significant impact in the long term.
Also weighing on the output-cut decision by OPEC and its allies is the blockade of Libya's ports which has hampered its oil exports.
The state-owned Libyan National Oil Corporation (NOC) said on Tuesday that the country's daily production of crude oil has dropped from more than 1.2 million barrels per day to fewer than 200,000 barrels per day as a result of the closure of oil fields and ports.
Tribal leaders in eastern Libya closed oil ports recently, accusing the UN-backed Libyan government of using oil revenues to support armed groups against the east-based army.
The east-based army has been leading a military campaign since early April 2019, attempting to take over the capital Tripoli from the UN-backed government.
Analysts believe the effect of novel coronavirus on the oil demand would be short lived, and they expected a strong rebound in oil demand in the subsequent quarters as the concerns over a tight supply are growing.