Oil falls after report that Russia rejected deeper OPEC production cuts

Oil prices fell on Thursday after Russia reportedly rejected additional OPEC-led production cuts, the Wall Street Journal reported, citing unnamed cartel delegates.

The Saudi-led producer group has been unable to reach a consensus over its response to China’s coronavirus outbreak.

The committee, which is not a decision-making body, met for a third day in Vienna.

Brent futures fell 52 cents, or 0.9%, to $54.76 a barrel, having risen 2.4% in the previous session. U.S. West Texas Intermediate futures fell 10 cents to trade at $50.65 per barrel.

“Saudi Arabia seems ready to push for a very proactive and immediate production response,” bank RBC said in a note.

China on Thursday said it would halve additional tariffs levied against 1,717 U.S. goods last year, following the signing of a Phase 1 deal between the two countries.

This makes China’s goal to ramp up its U.S. purchases to $200 billion over the next two years more achievable,” JBC Energy said in a note.

Oil prices have slumped more than 20% since reaching their highest this year on Jan. 8 on demand concerns caused by the virus outbreak and indications of oversupply.

A technical market indicator known as the relative strength index, which measures buying and selling momentum, suggests that prices have fallen too far, too fast and investors may be buying futures in response.

In the last two days, commodities, equities and other markets have been buoyed by unconfirmed reports of a possible advance in producing treatment drugs for the coronavirus that has shut down transport and limited industrial activity in China.

However, the World Health Organization has played down the reports of “breakthrough” drugs being discovered.

A further 73 people on the Chinese mainland died on Wednesday from the virus, the highest daily increase since the outbreak started, and another 3,694 new cases were reported, raising the total to 28,018.

Commodity supply chains in China have been disrupted to the extent that short-term sales of crude oil, along with liquefied natural gas, fell to nearly zero this week.

While oil prices have gained in the past two days, the front month contracts of both Brent and WTI remain in contango, a situation where longer-dated futures trade at a premium to shorter dated ones, indicating the market sees ample supply or falling demand for crude.

Source: https://www.cnbc.com/2020/02/06/oil-markets-coronavirus-oil-demand-in-focus.html

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