Oil rises as OPEC backs deeper supply cuts

FAN Editor
FILE PHOTO: Oil pours out of a spout from Edwin Drake's original 1859 well that launched the modern petroleum industry
FILE PHOTO: Oil pours out of a spout from Edwin Drake’s original 1859 well that launched the modern petroleum industry at the Drake Well Museum and Park in Titusville, Pennsylvania U.S., October 5, 2017. REUTERS/Brendan McDermid/File Photo

March 5, 2020

By Bozorgmehr Sharafedin

LONDON (Reuters) – Oil rose on Thursday after major producers agreed on deeper output cuts to bolster prices as worries intensify over the fast-spreading coronavirus outbreak and its impact on the global economy and crude consumption.

Brent crude <LCOc1> rose by 19 cents, or 0.4%, to $51.32 a barrel by 1133 GMT. U.S. West Texas Intermediate (WTI) <CLc1> was up 15 cents, or 0.3%, at $46.93.

OPEC agreed to cut output by an extra 1.5 million barrels per day (bpd) in the second quarter of 2020 but made it conditional on Russia joining the pact, two OPEC sources said.

Russia, however, has so far indicated that it would back an extension rather than deeper production cuts.

“Oil prices are trading slightly higher as Opec seems to have agreed to an even higher additional production cut than has being circulating in previous days,” said UBS oil analyst Giovanni Staunovo.

“That said, the price increase is modest, as Russia won’t be back at the negotiating table until Friday.”

(Graphic: OPEC production vs. world demand – https://fingfx.thomsonreuters.com/gfx/editorcharts/OIL-PRICES/0H001R8DMC2Q/eikon.png)

Prices were supported by a lower than expected rise in crude oil inventories in the United States, alleviating some concern about oversupply in the world’s biggest oil consumer.

U.S. crude stocks rose modestly last week – less than analysts had expected – while U.S. oil exports rose to more than 4 million bpd for the first time since December, suggesting a rise in overseas demand. [EIA/S]

Concern over demand growth remains, however. The head of the International Monetary Fund said that the global spread of the virus has crushed hopes for stronger economic gains this year.

China’s top gas importer, PetroChina <601857.SS>, has declared force majeure on natural gas imports because of the coronavirus outbreak.

The company issued the notice, which allows the suspension of contractual obligations because of exceptional circumstances, to suppliers of piped gas and to at least one liquefied natural gas supplier, though details could not be confirmed immediately.

(Reporting by Bozorgmehr Sharafedin; Additional reporting by Jessica Jaganathan in Singapore; Editing by Barbara Lewis and David Goodman)

Free America Network Articles

Leave a Reply

Next Post

Hugo Boss sees coronavirus hit to sales spreading from Asia

FILE PHOTO: Jackets are on display in the Hugo Boss section in the Central Universal Department Store (TsUM) in Kiev, Ukraine, May 17, 2017. REUTERS/Valentyn Ogirenko/File Photo March 5, 2020 BERLIN (Reuters) – German fashion house Hugo Boss <BOSSn.DE> warned on Thursday that the coronavirus will have a significant impact […]