UPDATE 7-Oil prices dive to lowest in over a year as virus fears grow

* New infections outside China exceeds those inside
* U.S. crude stocks rise, gasoline inventories drop -EIA
* Oil price drop may spur OPEC+ to act -analyst
* OPEC+ due to meet March 5-6

(New throughout, updates prices, market activity and comments,
adds Saudi volume cut to China)
By Devika Krishna Kumar
NEW YORK, Feb 27 (Reuters) - Oil prices fell for a fifth
straight day on Thursday, plunging to their lowest levels since
January 2019 as more new coronavirus cases outside China fanned
fears that a pandemic could slow the global economy.
Brent crude LCOc1 was down $1.81, or 3.4%, at $51.61 a
barrel at 11:51 a.m. ET (1651 GMT), off the session low of
$50.97 a barrel, the lowest since December 2018. West Texas
Intermediate (WTI) futures CLc1 fell by $2.06, or 4.2%, to
$46.66, after hitting their lowest since January 2019.
For the first time since the outbreak erupted, the number of
new coronavirus infections outside China exceeded new Chinese
cases. Trading in oil markets suggested investors expect a
prolonged period of oversupply, with demand hit as the virus
spreads to large economies including South Korea, Japan and
Italy.
"Oil is in freefall as the magnitude of global quarantine
efforts will provide severe demand destruction for the next
couple of quarters," said Edward Moya, senior market analyst at
OANDA in New York.
"The first U.S. case of unknown origin has energy markets
preparing that a prolonged deep drop in demand for crude is upon
us"
The crude market is watching for possible deeper output cuts
by the Organization of the Petroleum Exporting Countries and its
allies including Russia, a group known as OPEC+ set to meet in
Vienna on March 5-6. The group is currently reducing supply by
roughly 1.2 million bpd to support prices. Consultants Facts Global Energy forecast oil demand would
grow by 60,000 barrels per day in 2020, a level it called
"practically zero", due to the outbreak. U.S. gasoline futures RBc1 fell as much as 5.5% to $1.3742
a gallon, lowest since late January 2019. Heating oil futures
HOc1 dropped 2.1% to $1.4677 a gallon, after hitting the
lowest since July 2017. Businesses in China have started to
reopen as the number of new cases has waned.
"It makes me think that the downside here now moves from
crude to products should the virus continue to grow outside of
China as their rates return, exports surge and perhaps the rest
of the market isn't there to take it from them," said Scott
Shelton, energy broker with ICAP in Durham, North Carolina.
Margins for producing distillates HOc1-CLc1 - heating oil,
diesel fuel and jet fuel - have hit their lowest levels since
2017 due to fears of reduced demand.
Global equities resumed their plunge, wiping out more than
$3 trillion in value this week alone. For both Brent and WTI, the spread between December 2020
futures and December 2021, a popular trade used as a barometer
for supply expectations, fell firmly into negative territory.
Both spreads CLZ0-Z1 LCOZ0-Z1 hit the widest levels since
January 2019, signaling erosion in demand could lead to a glut
through the end of this year.
Saudi Arabia, the world's top oil exporter, is reducing
crude supplies to China in March by at least 500,000 barrels per
day (bpd) due to slower refinery demand following the
coronavirus outbreak, two sources with knowledge of the matter
said.