New York
Oil prices bounced on Tuesday a day after falling to their lowest in more than a year, edging up on hopes that more cuts in crude production from OPEC and its allies would offset demand destruction related to the coronavirus outbreak.
Brent crude was up 65 cents, or 1.2%, to $55.10 a barrel by 11:45 a.m. EST, while U.S. West Texas Intermediate (WTI) crude gained 52 cents, or 1%, to $50.63. The gains marked a rebound after an extended slide over the past two weeks on concerns over the global economic impact of China’s coronavirus. Crude prices fell on Monday to their lowest in more than a year.
Sources close to the matter told Reuters on Monday that OPEC+, comprising the Organization of the Petroleum Exporting Countries and allies including Russia, was considering cutting crude output by a further 500,000 barrels per day (bpd).
However, the producer group could face an uphill battle to put more cuts in place so soon after the existing pact was agreed to and because of uncertainty over how long the virus crisis will last.
“Any changes in supply policy … will be decided on the basis of their assessment of the duration of the impact of the coronavirus,” the global head of commodity strategy at BNP Paribas, Harry Tchilinguirian, told the Reuters Global Oil Forum. “If the producer group believes the outbreak to be contained, with effects tapering out after a short period, like SARS, they have the option to stand pat and weather the lower price environment until demand returns.”—Reuters
