Oil rises as OPEC backs deeper supply cuts - Reuters

LONDON (Reuters) - Oil fell on Thursday as worries intensified over the fast-spreading coronavirus outbreak and OPEC ministers met in Vienna to seek Russian backing for deeper output cuts to bolster prices.

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

Brent crude LCOc1 fell by 37 cents, or 0.7%, to $50.76 per barrel by 1015 GMT, and U.S. West Texas Intermediate (WTI) CLc1 was down by 33 cents, or 0.7%, at $46.45 per barrel.

Saudi Arabia wants the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, to cut output by between 1 million and 1.5 million barrels per day (bpd) for the second quarter and to keep existing cuts in place until the end of 2020.

But Russia has indicated it would back an extension, not a deeper cut.

“An agreement to reduce the OPEC+ group output level by at least 1 million bpd is imperative, otherwise oil prices will re-visit the recent lows and possibly break below them,” said oil broker PVM’s Tamas Varga.

(Graphic: OPEC production vs. world demand - here)

Robert Ryan, chief energy strategist at BCA Research also said the absence of a new output deal would depress the market.

“We would expect a sell-off in crude oil that takes Brent prices below $50 per barrel, and WTI into the mid-$40s,” he said, referring to the impact of a failure to agree new cuts.

Prices were supported earlier in the session by a lower-than-expected rise in crude oil inventories in the United States, alleviating some concerns of 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 barrels per day (bpd) for the first time since December, suggesting a rise in overseas demand. [EIA/S]

Concerns over demand growth remained, however. The head of the International Monetary Fund said 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 following the coronavirus outbreak.

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

Reporting by Bozorgmehr Sharafedin, additional reporting by Jessica Jaganathan in Singapore; editing by Barbara Lewis

Our Standards:The Thomson Reuters Trust Principles.

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