Algeria: OPEC calls for more oil cuts on coronavirus impact

Andrew Cummings
February 13, 2020

The barrel of West Texas Intermediate advanced to its highest level in six days at $51.72 before erasing a small portion of its gains following the US Energy Information Administration's (EIA) weekly oil market report.

Those were the highest settles for both futures since January even though the US government reported a larger-than-expected weekly build in crude inventories that was countered by a decline in fuel stocks, including an unexpected gasoline drawdown.

USA crude inventories rose by 6 million barrels in the week to February 7 to 438.9 million barrels, beating analysts' expectations for an increase of 3 million barrels, data from industry group the American Petroleum Institute showed.

"Gasoline demand is starting to rebound, and the modest drawdown in refined fuels helped to offset the bearish, blaring crude oil headline", said John Kilduff, a partner at Again Capital in NY.

Growth rate of new coronavirus infections start to decline. Still, worldwide experts remained cautious over forecasting when the outbreak might peak.

The death toll climbed above 1,000 on Tuesday, while the number of new confirmed cases fell.

Travel restrictions to and from China and quarantines have cut fuel usage. "The coronavirus outbreak adds to uncertainties for the oil market in 2020", OPEC noted in its monthly report and added that they need "continuous monitoring". Chinese state refiners plan to cut as much as 940,000 barrels per day (bpd) - nearly 1% of world demand - from their crude processing rates in February.

USA supply reports are due later on Tuesday and on Wednesday.

That keeps both Brent and WTI in oversold territory for 13 days and 14 days, respectively, their longest bearish streaks since November 2018.

Investors remain wary that China's oil demand could take a further hit if the coronavirus cannot be contained and if OPEC and its allies, known as OPEC+, fail to agree on further steps to support prices.

The new coronavirus has spread to more than 20 countries after emerging in December in China, where it has killed more than 400 people and infected 20,000.

Wednesday's report comes after OPEC members and their allies, including Russian Federation, last week were unable to reach an agreement to deepen production cuts.

The revised forecast for global oil demand could bolster the case for even more production curbs.

Other reports by iNewsToday