Oil prices steady as output cut expectations offset coronavirus concern

By Noah Browning LONDON (Reuters) - Oil prices were little changed on Monday as concerns over the economic fallout from the coronavirus outbreak in China were offset by hopes that potential output cuts from major producers could tighten crude supply. Brent crude was at $57.23 a barrel, down 9 cents, by 1525 GMT after rising 5.2% last week, its biggest weekly gain since September 2019. U.S.

Reuters February 18, 2020 00:07:28 IST
Oil prices steady as output cut expectations offset coronavirus concern

coronavirus concern" src="https://images.firstpost.com/wp-content/uploads/reuters/02-2020/18/2020-02-17T120123Z_2_LYNXMPEG1G03D_RTROPTP_2_GLOBAL-OIL.jpg" alt="Oil prices steady as output cut expectations offset coronavirus concern" width="300" height="225" />

By Noah Browning

LONDON (Reuters) - Oil prices were little changed on Monday as concerns over the economic fallout from the coronavirus outbreak in China were offset by hopes that potential output cuts from major producers could tighten crude supply.

Brent crude was at $57.23 a barrel, down 9 cents, by 1525 GMT after rising 5.2% last week, its biggest weekly gain since September 2019.

U.S. West Texas Intermediate crude was up 2 cents to $52.07 a barrel, after a 3.4% gain last week.

"Nothing goes down forever, as they say, and oil appears to have finally shaken off its bearish malaise," said Stephen Brennock of oil broker PVM.

"Virus anxieties were put on the back burner. Investors cheered a salvo of stimulus measures from China's central bank ... sentiment was given a supportive jolt by expectations of a supply response from the OPEC+ producer alliance."

The International Energy Agency (IEA) said last week the virus was set to cause oil demand to fall by 435,000 barrels per day (bpd) year-on-year in the first quarter, in what would be the first quarterly drop since the financial crisis in 2009.

Oil rose last week for the first time since early January on optimism that Chinese economic stimulus measures could lead to a recovery in oil demand in the world's largest importing country.

There are some indications of prompt demand for oil as the front-month Brent futures market has shifted to a backwardation, when near-term prices are higher than later-dated prices, from a contango.

Investors are also anticipating that the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, will approve a proposal to deepen production cuts to tighten global supplies and support prices.

The group, known as OPEC+, has an agreement to cut oil output by 1.7 million bpd until the end of March.

A technical committee earlier this month recommended the group reduce production by another 600,000 bpd because of the impact of the coronavirus , though oil prices' first weekly gain since early January on Friday may give the producers pause.

"The more recent strength that we have seen in the market may also make OPEC+ complacent when it comes to taking action," ING said in a note.

"Already the group has failed to bring forward the meeting that was originally scheduled for early March. And if the market consolidates around current levels, OPEC+ may see little need to rush a decision."

(Reporting by Noah Browning and Florence Tan; Editing by David Evans, Jan Harvey and Helen Popper)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

TAGS:

also read

Amazon union vote enters final stretch in watershed moment for U.S. labour
Business

Amazon union vote enters final stretch in watershed moment for U.S. labour

By Mike Spector and Jeffrey Dastin (Reuters) - The National Labor Relations Board has begun reviewing ballots from Amazon.com Inc's workers in Alabama, who have voted on whether to form a union, with momentum for future labour organizing at America's second-largest private employer hanging in the balance. Agents from the labour board began sifting through ballots sent to more than 5,800 workers at Amazon's Bessemer, Alabama-based warehouse at 10 a.m

Spotify buys Locker Room app's maker Betty Labs in live audio push
News & Analysis

Spotify buys Locker Room app's maker Betty Labs in live audio push

By Elizabeth Culliford NEW YORK (Reuters) - Spotify Inc said on Tuesday it has purchased Betty Labs, the company behind sports-focused social audio app Locker Room, to accelerate its move into live audio. New voice-based platforms, including invite-only social app Clubhouse, have seen rapid growth in recent months during the COVID-19 pandemic.

Oil falls as Suez Canal opens, dollar rallies; eyes on OPEC+ meeting
Business

Oil falls as Suez Canal opens, dollar rallies; eyes on OPEC+ meeting

By Devika Krishna Kumar NEW YORK (Reuters) - Oil prices slid on Tuesday as the Suez Canal reopened to traffic and the dollar rallied, while focus turned to an OPEC+ meeting this week, where analysts expect an extension to supply curbs to offset dim demand prospects. Brent crude fell $1.20, or 1.9%, at $63.78 a barrel by 1:12 p.m.