UPDATE 9-Oil sinks to 3-month lows as coronavirus raises demand fears

* Brent, U.S. crude fall to three-month lows
* Saudi energy minister seeks to calm market
* For FACTBOX on latest virus developments, see * Map on the spread of the virus: https://tmsnrt.rs/2vbcRsm

(New throughout, updates prices, market activity and comments
to settlement)
By Laila Kearney
NEW YORK, Jan 27 (Reuters) - Crude futures dropped 2% to
three-month lows on Monday as the death toll from China's
coronavirus grew, curtailing travel and fueling expectations of
slowing oil demand.
Brent crude LCOc1 settled at $59.32 a barrel, losing
$1.37, or 2.3%, its lowest since Oct. 21. U.S. crude CLc1
settled at $53.14 a barrel, was down $1.05, or 1.9%, its lowest
since Oct. 2.
Global stock exchanges, which oil prices tend to follow,
also sank as investors grew increasingly anxious about the
widening crisis. Demand spiked for safe-haven assets, such as
the Japanese yen and Treasury notes. MKTS/GLOB
The death toll from the coronavirus rose to 81 and the
Chinese government extended the Lunar New Year holiday to Feb.
2, trying to keep as many people as possible at home to prevent
the virus from spreading further. "This thing still in the process of rearing its ugly head
and that's why oil is taking this so hard because this could
really turn into an acute drop in demand at least for a time,"
said John Kilduff, partner at Again Capital LLC in New York.
The lockdown of a growing number of Chinese cities and
canceled flights threatens one of the steadiest growth areas of
global oil demand, with jet fuel accounting for about 15% of
demand growth in China, RBC Capital Markets said in a report.
However, worries over the easing of jet fuel consumption is
currently confined to China, RBC said.
Saudi Arabia and the United Arab Emirates, allies in the
Organization of the Petroleum Exporting Countries (OPEC), tried
to play down the impact of the virus on Monday, with Riyadh, the
de-facto OPEC leader, saying the group could respond to any
changes in demand.
An OPEC source said there were "preliminary discussions"
among OPEC+ for an extension of the current oil supply cuts
beyond March, and a possible deeper cut was also an option, if
there was a need, and if the China virus spread impacted oil
demand.
Saudi Arabia's Energy Minister Prince Abdulaziz bin Salman
Al-Saud said he felt confident the new virus would be contained.
OPEC and its allies including Russia, a group known as
OPEC+, has been withholding supply to support oil prices for
nearly three years and on Jan. 1 increased an agreed output
reduction by 500,000 barrels per day (bpd) to 1.7 million bpd
through March.
Brent crude oil prices have dropped by almost a fifth since
a spike in tensions between the United States and Iran briefly
lifted prices above $70 a barrel on Jan. 8.
The losses since are in spite of a 75% drop in output from
Libya to less than 300,000 bpd due to an ongoing blockade of
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FACTBOX-Latest on the coronavirus spreading in China
showing places with confirmed cases of 2019-nCoV IMG https://tmsnrt.rs/2vbcRsm
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