Oil hovered around $50 a barrel on signs an extraordinary Opec+ meeting to decide on further production cuts to deal with the demand hit from the coronavirus is looking less likely.
Ministers from the group and its allies are unlikely to hold an early meeting this month, while one planned for March will go ahead, Azerbaijan Energy Minister Parviz Shahbazov told the RIA Novosti newswire. Russia has been resisting Saudi Arabian efforts to reduce output after Opec+ technical experts recommended an additional cut of 600 000 barrels a day through June.
Crude has tumbled as the virus wreaked havoc on the economy of the world’s biggest oil importer, with Chinese refineries cutting the amount they’re processing by around 15%. Prices could come under further pressure if talks aimed at ending the conflict in Libya, where a blockade of ports has pushed production to the lowest level since 2011, lead to a restoration of output.
Should Opec fail to reach an agreement to cut supply, there could be additional downside to prices, Stephen Innes, Asia Pacific market strategist at AxiCorp, said in a note. A drop in US drilling activity will be required to make a sufficient dent in global oil supplies, he said.
West Texas Intermediate crude for March added declined 0.3% to $50.19 a barrel on the New York Mercantile Exchange as of 1 p.m. in Singapore after dropping as much as 1.5% earlier. It closed 1.2% lower on Friday.
Brent for April delivery fell 0.2% to $54.35 a barrel on the London-based ICE Futures Europe exchange after losing 0.8% Friday. The global crude benchmark traded at a $3.92 premium to WTI for the same month.
Oil short-selling has more than doubled in just two weeks as the coronavirus battered the demand outlook. Hedge funds boosted bearish wagers against WTI crude by 41% in the week ended Feb. 4, following a 52% surge a week earlier.
Opec may extend its current production cuts through the end of 2020 in response to the slumping demand, Algerian Energy Minister Mohamed Arkab said Saturday. The group will need to reduce output by an additional 500 000 barrels a day to bring the market back toward balance, Sanford C Bernstein & Co. said in a note released Monday.
Libya’s battered economy took center stage at United Nations-backed talks on ending the conflict in Cairo. The two-day meeting that started Sunday is being closely watched for an sign of a deal that could restore over one-million barrels a day of output to global oil markets.