OPECs waning influence laid bare as coronavirus outbreak hammers oil prices, analysts say

  • China’s National Health Commission confirmed Wednesday that the coronavirus had infected 5,974 people, with 132 deaths and 103 cured.
  • Financial markets have been spooked by the spread of a deadly pneumonia-like virus, with energy market participants trying to assess the potential economic fallout.
  • “I have to say this delicately, but OPEC, I think, is starting to realize that even though they cut back, try to balance output and stabilize prices, they have less influence,” John Driscoll, chief strategist at JTD Energy Securities, told CNBC.

OPEC’s battle to support oil prices as China’s coronavirus spreads internationally shows the producer group is struggling to carry the same influence over global crude markets, energy analysts have told CNBC.

It comes amid speculation that OPEC and non-OPEC producers, sometimes referred to as OPEC+, could extend production cuts if the intensifying outbreak of the coronavirus hampers oil demand growth.

International benchmark Brent crude traded at $59.86 a barrel Wednesday afternoon, up over 0.5%, while U.S. West Texas Intermediate (WTI) stood at $53.70, around 0.45% higher.

Both crude benchmarks have pared some of their recent losses, after slumping to multi-month lows earlier in the week.

“Will deeper OPEC supply curbs provide the panacea for the current oil market malaise? Probably not,” Stephen Brennock, oil analyst at PVM Oil Associates, said in a research note published Wednesday.

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