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2020-02-14 12:20:00

OIL PRICE: ABOVE $56 ANEW

OIL PRICE: ABOVE $56 ANEW

REUTERS - FEBRUARY 14, 2020 - Oil prices edged higher Friday, on track for their first weekly gain in six weeks, backed by expectations that major producers will implement deeper output cuts to offset slowing demand in China caused by the coronavirus epidemic.

Brent crude futures LCOc1 were up 13 cents at $56.47 a barrel by 0731 GMT, after gaining 1% the previous session. Brent is 3.7% higher for the week, the first increase since the week of Jan. 3.

U.S. West Texas Intermediate (WTI) futures CLc1 were 14 cents higher at $51.56 a barrel. The contract rose 0.5% on Thursday and is now 2.4% higher for the week.

"Oil prices appear to have stabilized this week on optimism that OPEC+ will once again do whatever it takes to tighten output and on hope that the coronavirus peak is nearing," said Edward Moya, senior market analyst at OANDA in New York.

Crude prices have plunged about 20% from their 2020 peaks on Jan. 8 as oversupply concerns combined with worries about large fuel demand declines in China as the country's quarantine to fight the coronavirus outbreak has stymied economic activity.

In response to the demand slump, the Organization of the Petroleum Exporting Countries (OPEC) and its allied producers, a grouping known as OPEC+, are considering cutting output by up to 2.3 million barrels per day.

"Sentiment remains cautious across Asia-Pacific region, due to virus uncertainty," said Margaret Yang, market analyst at CMC Markets, adding that the extent of the virus-led global oil demand destruction remained unclear.

But other analysts caution the demand impact is only limited to China so far.

"The spread of the coronavirus remains extremely fluid and while market sentiment is held at the mercy of each passing coronavirus headline, our baseline thesis remains that oil demand destruction remains largely a China story and has yet to spill over to impact global demand," said Helima Croft, head of commodity strategy at Citadel Magnus.

The market is signaling that some near-term demand for oil remains. The spread between the first-month April Brent future and the May contract has narrowed to a discount of only 1 cent a barrel on Friday from a discount of 33 cents a week ago. 

The narrowing of this contango - a market situation that occurs when prompt prices are less than later-dated contracts - suggest that demand for oil is improving for Brent-related crude.

Still, some concern remains about the impact the Chinese demand slowdown may have.

The International Energy Agency (IEA) on Thursday said that first quarter 2020 oil demand is set to fall versus a year earlier for the first time since the financial crisis in 2009 because of the coronavirus outbreak in China.

----- 


Earlier:

OIL PRICE: ABOVE $56 ANEW
2020, February, 12, 12:20:00
OIL PRICE: ABOVE $55 ANEW
Brent was up $1.12, or 2.1%, at $55.13 per barrel, WTI rose 74 cents, or 1.5%, to $50.68 a barrel.
OIL PRICE: ABOVE $56 ANEW
2020, February, 10, 10:50:00
OIL PRICE: ABOVE $54
Brent crude futures gave up losses to be up 17 cents at $54.64 a barrel while U.S. crude futures added 8 cents to $50.4 a barrel.
OIL PRICE: ABOVE $56 ANEW
2020, February, 7, 11:15:00
OIL PRICE: NEAR $55
Brent rose 24 cents, or 0.4%, to $55.17 a barrel, WTI were up 15 cents, or 0.3%, at $51.10 a barrel,
OIL PRICE: ABOVE $56 ANEW
2020, February, 7, 11:05:00
OPEC+ : 600 TBD
The Russian delay is sure to frustrate OPEC kingpin Saudi Arabia, which had called for the collective to immediately implement deeper cuts of 500,000 b/d or more amid the sell-off in crude prices.
OIL PRICE: ABOVE $56 ANEW
2020, February, 5, 11:30:00
OIL PRICE: ABOVE $54
Brent were up 31 cents, or 0.6%, to $54.27 a barrel, WTI were up 21 cents or 0.4% to $49.82 a barrel
OIL PRICE: ABOVE $56 ANEW
2020, February, 5, 11:25:00
OIL MARKET: WITHOUT A PANIC
"Any overreaction...is not in the interest of the general public, let alone the oil market. We have the consensus that we would not like to see this."
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Tags: OIL, PRICE, BRENT, WTI