Oil prices rebound, fuelled by hopes for OPEC+ supply cuts

Daniel Fowler
February 4, 2020

WTI crude was also trading down on Monday, at $49.99 per barrel, below the $50 threshold after falling 3.04 per cent on the day at New York Mercantile Exchange.

Economists have cut China's growth forecasts as the impact on businesses grows and BP Plc predicted the epidemic could wipe out about a third of global oil demand growth this year.

OPEC+ only just started a fresh round of deeper cutbacks last month, the latest step in a three-year effort to prevent plentiful US shale supplies putting the global market into surplus.

Saudi Arabia, the kingpin of Organization of Petroleum Exporting Countries (OPEC), is reportedly pushing for a deep, short-term oil production cut in response to waning demand triggered by the coronavirus outbreak. West Texas Intermediate and Brent forward curves weakened sharply - with Brent flipping to contango for the first time since July - further signaling slack demand for crude.

Last week, the USA declared coronavirus a public health emergency, following the stance from the WHO issued earlier.

A big part of the impact of global markets was "driven by psychological factors" and "pessimistic views", Saudi said. The bank's global research team now has its 2020 global growth forecast at 3.1 percent.

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"In talks that I had with the OPEC president, I emphasized that if there was to be a gathering before the scheduled meeting in March, all members should be prepared to reduce their production", he said.

The unusual appearance at the cartel's headquarters of Wang Qun, China's ambassador to worldwide organizations in Vienna, underscores how the outbreak has upended the global market.

The new coronavirus has killed over 420 people and infected thousands across more than a dozen nations, raising fears of a global economic fallout.

Similarly, diesel costs Rs 66.09 a litre in Delhi, Rs 69.27 a litre in Mumbai, Rs 68.49 per litre in Kolkata and Rs 69.81 a litre in Chennai, according to the Indian Oil Corporation website.

Oil prices have dropped by over 20% from their early January peak to hit a one-year low this week. "We are discussing it very seriously".

The OPEC+ group is considering deepening the cuts it made in December by another 500,000 barrels per day, according to Reuters. The group has removed a total of 1.7 million bpd since January 2017.

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