Oil Falls Below $49, Flu Pandemic May Hurt Economy

CNBC
Monday, April 27, 2009

Oil prices fell nearly 6 percent to below $49 a barrel on Monday, pressured partly by expectations the world economy could suffer another blow if a flu outbreak in Mexico turns out to be the start of a pandemic.

The flu outbreak in Mexico has killed more than 100 people and already spread to the United States and Europe, prompting fears of a pandemic that boosted the U.S. dollar and hit equity markets in Asia and Europe.

“The potential for a drop in jet fuel demand is also weighing on oil markets,” Addison Armstrong, an analyst at Tradition Energy, said in a research note.

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Airline shares were hit by expectations the flu outbreak could affect air travel.

“Nervousness about another batch of US earnings reports and macro reports, coupled with a potential pandemic out of Mexico, are both weighing on prices,” said Edward Meir of broker MF Global in a research note. “The Mexican situation is resurrecting fears of the chilling impact that the SARS epidemic had on economic growth.”

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