Crude oil prices edged higher on Thursday, lifted by reports that the Organization of the Petroleum Exporting Countries (OPEC) proposes to increase production cuts. However, the rise was just modest, as Russia reportedly has not agreed to the recommendation from OPEC's technical committee, which recommended an additional cut of 0.6 million barrels a day to stabilize the market.
West Texas Intermediate crude oil futures for March ended up $0.20, or about 0.4%, at $50.95 a barrel. Brent crude futures were down by about $0.23 at $55.05 per barrel in late afternoon trades. On Wednesday, WTI crude oil futures for March ended up $1.14, or 2.3%, at $50.75 a barrel. Although there are reports that some breakthroughs have been made in developments in the treatments for the coronavirus,
World Health Organization officials have damped down expectations of imminent breakthroughs. The virus outbreak has reportedly claimed 563 lives in China and sparked fears of an economic slowdown in China. Meanwhile, on the trade front, China said it would slash tariffs on $75 billion of U.S. imports in half as part of its efforts to implement a recently signed trade deal. China's finance ministry said that from February 14, it would lower tariffs on some U.S. goods from 10% to 5% and on others from 5% to 2.5%.
Oil Prices Edge Higher On Optimism Over Production Cuts
Oil prices rose slightly on Friday after Russia reportedly backed a recommendation to deepen OPEC+ global oil supply curbs amid contracting demand for crude as a result of the coronavirus outbreak. Benchmark Brent crude edged up 0.15 percent to $55.01 a barrel, after declining 0.6 percent in the previous session. U.S. West Texas Intermediate (WTI) crude futures were marginally higher at $50.99 a barrel.
A technical panel that advises the Organization of Petroleum Exporting Countries (OPEC) and its allies led by Russia proposed a provisional cut in output of 600,000 barrels per day (bpd), Reuters said, citing sources. We support this idea and Russia is in consultations to determine which were the optimum measures for all market participants, Sergei Lavrov, Russia's Foreign Minister said at a news conference in Mexico City.
Concerns persisted around the global economic impact of the deadly coronavirus as the death toll and the number of infections continued to soar in China. According to Chinese state media, President Xi Jinping told U.S. President Donald Trump on the phone today that Beijing has "spared no effort in fighting the epidemic" and that "the long-term trend of China's economic development for the better will not change".
Oil prices fell on Thursday as worries about a possible slowdown in oil demand outweighed expectations that major producers are likely to enact deeper output cuts. Benchmark Brent crude fell 1.1 percent to $55.20 per barrel, after having climbed 3.2 percent on Wednesday.
U.S. West Texas Intermediate (WTI) crude futures were down 0.8 percent at $50.76 a barrel, after gaining 2.5 percent the previous day on news that the number of new coronavirus cases slowed in China. Concerns over China's coronavirus outbreak hitting demand for fuel intensified after some 242 deaths from the new coronavirus were recorded in the Chinese province of Hubei on Wednesday - the bulk of it due to a reclassification.
There was also a huge increase in the number of cases, with 14,840 people diagnosed with the virus. OPEC has dramatically lowered its forecast for oil demand growth this year, saying the coronavirus outbreak has added to the uncertainties surrounding global economic growth in 2020. In a closely-watched monthly report published Wednesday, the producer group revised its outlook for global oil demand growth to 0.99 million barrels per day (bpd) in 2020 - down by 0.23 million bpd from the previous month's estimate because of travel restrictions to and from the country and quarantines within it.
Investors were also reacting to EIA data released on Wednesday showing a jump in U.S. crude stockpiles last week. According to the Energy Information Administration, crude stockpiles in the U.S. were up by 7.5 million barrels in the week ended February 7, more than three times the expected increase. On Tuesday, the American Petroleum Institute released a report that said crude oil stockpiles rose by 6 million barrels last week.