OPEC+ deal could boost oil prices, but oversupply remains

* OPEC+ agrees largest ever oil output cut- sources
* Russia's Novak says U.S. ready to cut oil output by 2-3
mln bpd
* Worldwide fuel consumption down 30% from coronavirus
effects

By Stephanie Kelly
NEW YORK, April 12 (Reuters) - An oil producer deal to make
record output cuts will lend some support this week to oil
prices that have lost half their value this year as the
coronavirus hammers demand.
Total global oil supply cuts could come to 20 million
barrels per day, around 20% of global supply, Kuwait's oil
minister said. After four days of wrangling, OPEC, Russia and
other oil-producing nations, a group known as OPEC+, agreed on
Sunday to cut output by a record amount of 9.7 million barrels
per day, representing around 10% of global supply to support oil
prices amid the pandemic, sources said. Kuwait's oil minister said the effective reduction in oil
supply by OPEC+ and other G20 countries would be roughly 20
million bpd. "If G20 adds about another 10 mln bpd, then the world is
meeting the total imbalance from May and this would be a massive
relief," Rystad Energy said. "Still storage will be filled to
nearly the top in April, but the market will stabilize."
The leaders of the world's top three oil producers,
Russian President Vladimir Putin, U.S. President Donald Trump
and Saudi Arabia's King Salman, all supported the OPEC+ deal to
cut global crude output, the Kremlin said on Sunday.
Trump praised the deal, saying it would save jobs in the
U.S. energy industry. Saudi Arabia, Kuwait and the UAE volunteered to make cuts
even deeper than those agreed, which would effectively bring the
OPEC+ supply down by 12.5 million bpd from current supply
levels, the Saudi energy minister said. "I am honored to be a party of this historic moment and
historic agreement," Saudi's Prince Abdulaziz bin Salman told
Reuters.
Worldwide fuel consumption is down roughly 30%, due to the
COVID-19 pandemic caused by the novel coronavirus that has
killed more than 100,000 people worldwide and kept businesses
and governments on lockdown. The deal could boost prices whose values have more than
halved since the start of the year, before major effects from
the pandemic began to sink in. Brent crude futures LCOc1
settled at $31.48 a barrel on Thursday, while U.S. crude futures
CLc1 were last at $22.76 a barrel.
On Thursday, OPEC+ outlined plans to cut output by more than
a fifth, or by 10 million barrels per day (bpd), but Mexico
balked at the production cuts it was asked to make, delaying the
signing of a final deal. The group met on Sunday to hammer out a
deal.
OPEC+ has also said it wanted producers outside the group,
such as the United States, Canada, Brazil and Norway, to cut a
further 5% or 5 million bpd.
Canada and Norway signaled a willingness to cut. The United
States, where anti-trust legislation makes it hard to act in
tandem with cartels such as OPEC, has said its output would fall
by as much as 2 million bpd by itself this year because of low
prices.
"We're going to see a significant drop in production anyway
from producers who can't make money producing," said Phil Flynn,
an analyst at Price Futures group. "A deal should give us enough
cushion to get us through the next few months."
Speaking ahead of the OPEC+ meeting, Russian Energy Minister
Alexander Novak said the United States was ready to cut its oil
output by 2 million to 3 million barrels per day, Interfax news
agency reported, although it was unclear if he was referring to
market-based cuts.
More than 1.7 million people have been reported to be
infected by the novel coronavirus globally and 109,519 have
died, according to a Reuters tally. Governments have ordered
residents to stay home to curb the spread, roiling markets and
disrupting daily life.