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Oil prices climb as OPEC, allies weigh output cuts to cushion coronavirus impact

Published 02/05/2020, 09:30 AM
Updated 02/05/2020, 09:32 AM
© Reuters. Oil prices climb as OPEC, allies weigh output cuts to cushion coronavirus impact
LCO
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* OPEC+ panel met to consider steps, hear from China UN
envoy
* Oil flips into contango, indicating months of surplus

By Jessica Jaganathan
SINGAPORE, Feb 5 (Reuters) - Oil prices rose on Wednesday,
reversing out of a 1% slump in the previous session, boosted by
producers weighing further output cuts to counter a potential
squeeze on global oil demand resulting from China's
fast-spreading coronavirus.
Brent crude oil futures LCOc1 were up 44 cents, or 0.8%,
to $54.40 a barrel by 0127 GMT, while U.S. West Texas
Intermediate (WTI) crude futures CLc1 were up 42 cents or 0.9%
to $50.03 a barrel.
The Organization of the Petroleum Exporting Countries (OPEC)
and its allies led by Russia, a group known as OPEC+, weighed
the impact on global oil demand, and economic growth, of the
coronavirus outbreak at a meeting on Tuesday, hearing from
China's envoy to the United Nations in Vienna. Producers are weighing further output cuts and moving a
planned policy meeting to February rather than March.
"At these prices, commodity producers will soon begin to cut
back on production and investment," Moody's Analytics said in a
note on Wednesday. "Given the economic damage caused (by the
virus) prospects are poor that prices will recover soon."
China, the world's biggest crude oil importer, has been the
main driver of global energy demand growth in recent years.
Fears of a virus-related slump in global demand have flipped
the oil market into contango this week - a structure in which
longer-dated oil futures trade at a premium that encourages
traders to keep crude in storage for more profitable resale in
the future, potentially indicating months of surplus.

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