Oil falls over 1% as Russia needs time on more OPEC+ cuts

Russian energy minister says Moscow needs to analyse market, will clarify position next week

LONDON: Oil prices slipped on Friday as Russia said it would need more time before committing to output cuts along with OPEC and other producers amid falling demand for crude as China battles the coronavirus epidemic.

Brent crude LCOc1 futures fell 60 cents, or 1.1%, to $54.33 a barrel by 1500 GMT, and were heading for a fifth weekly loss due to persistent concerns over the impact of the virus.

US West Texas Intermediate (WTI) crude CLc1 futures were down 70 cents, or 1.4%, at $50.25 a barrel, also heading for a fifth consecutive week of losses.

Russian Foreign Minister Sergei Lavrov said on Thursday that Moscow supported cooperation with other producers, in remarks which appeared to boost prices in early trading.

'India's economic recovery critical for oil in 2020'

However, Energy Minister Alexander Novak said on Friday Russia needed a few days to analyse the oil market and would clarify its position on deeper cuts next week.

Novak predicted global oil demand may fall by 150,000-200,000 barrels per day (bpd) in 2020 amid the virus - a relatively conservative forecast.

A panel advising the Organisation of the Petroleum Exporting Countries (OPEC) and allies led by Russia, known as the OPEC+ group, suggested provisionally cutting output by 600,000 barrels per day (bpd), three sources told Reuters.

The OPEC+ group, which pumps more than 40% of the world's oil, has been withholding supply and agreed to deepen the cuts by 500,000 bpd from the start of this year, to 1.7 million bpd, nearly 2% of global demand.

"The oil market may be willing to show some patience until the Kremlin decides the next course of action - how patient remains to be seen," BNP Paribas analyst Harry Tchilinguirian told the Reuters Global Oil Forum.

Prices came off earlier highs after China's central bank governor said the world's second-biggest economy may experience disruptions in the first quarter.

Eurasia group said it estimates a contraction in oil demand in China, the world's biggest importer of crude, of as much as 3 million bpd in the first quarter from 2019 levels.

Oil starts 2020 higher on trade optimism, Mideast tensions

Meanwhile, JPMorgan cut its estimate for Brent to average $60.40 a barrel in 2020, down $4.1 from its earlier forecast.

Oil prices have fallen by more than a fifth since the outbreak of the virus in the city of Wuhan in China.

"There is still plenty of uncertainty around the global balance, with it unknown how demand will evolve in the coming months as a result of the coronavirus," ING Economics said in a note.  

Published in The Express Tribune, February 8^th, 2020.

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