Oil prices fall on oversupply worries as virus hits China demand

Oil prices on Monday extended their decline from an early January peak above $70 as the spectre of excess supplies loomed over the market after the spreading coronavirus outbreak hit demand in China, the world's largest oil importer.

Brent crude hit a low of $53.63 a barrel and was at $54.09 by 0100 GMT, down 38 cents. US West Texas Intermediate fell 38 cents to $49.94 a barrel after striking a low of $49.56.

Worries over supply were not alleviated on Friday when Russia said it need more time to decide on a recommendation from a technical committee that has advised the Organization of the Petroleum Exporting Countries (OPEC) and its allies to cut production by a further 600,000 barrels per day.

Russia Energy Minister Alexander Novak said Moscow needed more time to assess the situation, adding that US crude production growth would slow and global demand was still solid.

The proposal for the further cuts "failed to alleviate the pressure on oil, in part because the proposal has yet to be formally discussed by OPEC ministers and because Russia continues to push back against further cuts," said Stephen Innes, chief market strategist at AxiCorp.

"If the cartel fails to reach an agreement, there will be more pain to come in oil (on the) downside."

Oil traders also said they are concerned the proposed reduction would not be sufficient to tighten global markets.