Oil slid more than 4% on Monday, falling into bear market territory as the number of coronavirus cases outside of China surged, worrying investors that a subsequent slowdown in the global economy could dent the demand for crude.

U.S. West Texas Intermediate crude slid 5.4%, or $2.87, to $50.51 per barrel, while International benchmark Brent crude fell $3.26, or 5.6%, to trade at $55.23 per barrel.

A derrick man secures a length of drill pipe during drilling on a natural gas drill rig near Montrose, Pennsylvania, U.S., on Monday, April 5, 2010.

Daniel Acker | Bloomberg | Getty Images

Raymond James cut its oil outlook on Monday as the number of coronavirus cases continues to rise.

“There is no escaping the fact that China — the world’s largest oil importer — will have meaningfully weaker near-term oil demand than we had envisioned as the year began,” analyst Pavel Molchanov wrote in a note to clients.

Molchanov said demand in the first quarter will be reduced by an average of 1.5 million barrels per day. He said that a warmer-than-normal winter across the Northern Hemisphere is also hitting demand.

Total confirmed cases of the coronavirus now stands at more than 79,400, while the death toll is more than 2,621. On Monday Italian news agency ANSA said that a seventh person has died in the country, with the number of confirmed cases exceeding 220.

Citi was among the other firms cutting its oil outlook as cases of the coronavirus accelerate.

“The oil market is confronting new signs of weakness, largely from the coronavirus and its impacts on refinery demand for crude oil and from Russia’s refusal to agree to an emergency OPEC+ meeting to curb oil production,” the firm said in a note to clients.

Citi said that it now believes inventories could grow to 2 million barrels per day in February alone, which will put “even more sustained pressure on prices.” A week ago, the firm’s forecast stood at a potential build of over one million barrels per day for the quarter.

The firm also raised its first quarter build projection from 112 million barrels to 145 million barrels, and lifted its second quarter forecast from 53 million barrels to 94 million barrels. “However, our draws for 3Q are lower vs. last week’s estimates,” the firm added.

Molchanov added that since the virus and weather issues are transitory, “the global oil market will need sustainably higher prices in order to avoid a major undersupply in 2021 and beyond.”

– CNBC’s Michael Bloom contributed reporting.

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