Oil falls in Asia due to global swine flu worries

SINGAPORE: Crude prices continued to decline in Asian trade Tuesday on worries that a global swine flu outbreak would hurt air travel and reduce oil demand, analysts said.

New York’s main contract, light sweet crude for June delivery, dropped $1.11 to $49.03 a barrel. Brent North Sea crude for June delivery was off $1.30 to $49.02.

“Concerns that the outbreak of swine flu may discourage air travel were a negative for the oil price,” said David Moore, a commodity analyst with the Commonwealth Bank of Australia in Sydney.

The swine flu outbreak that began in Mexico has raised fears of a global pandemic after suspected and confirmed cases were detected in parts of Europe, the United States and New Zealand.

Analysts said swine flu, a contagious and sometimes fatal respiratory disease among pigs, has the potential to affect the global aviation industry if the outbreak escalates further.

The last time an epidemic hurt the aviation sector was in 2003 when Severe Acute Respiratory Syndrome (SARS) sent the industry into a tailspin.

The World Health Organization on Monday raised its flu pandemic alert level from three to four, signalling a “significant increase in risk of a pandemic” under its criteria.

“For the moment, the initial flu news has created the spectre of a potentially globally economic depressing event just as the markets were evaluating the prospects for economic recovery,” JP Morgan Research analyst Lawrence Eagles said.

“An event of legitimate severity would be bearish for both crude and transportation fuel prices.” — AFP