UPDATE 17-Oil sinks as market doubts OPEC supply cuts will be enough

* OPEC+ debates oil cuts as big as 20 mln bpd -sources
* OPEC+ cuts may depend on U.S. contribution
* G20 energy ministers to meet on Friday
* U.S. oil rig count drops to lowest since Dec. 2016 -Baker
Hughes
* For Factbox on obstacles to output deal, click
* For Factbox on oil analysts' forecasts, click * For Factbox on OPEC deals since 1990s, click (Adds OPEC statement)
By Scott DiSavino
NEW YORK, April 9 (Reuters) - Oil prices tumbled on Thursday
on doubts that a deal between OPEC and allies to make a record
oil supply cut would be enough to offset the collapse in global
fuel demand caused by the coronavirus pandemic.
The Organization of the Petroleum Exporting Countries and
its allies including Russia, a group known as OPEC+, agreed to
cut output by 10 million barrels per day from May, the group
said in a statement. Before the coronavirus outbreak hit global transportation
and economic activity, 10 million bpd was about 10% of global
supply.
OPEC+ expects other producers including the United States to
cut another 5 million bpd. But Washington has not offered to
participate, and even if it did, the combined reduction in
supply would be about half the 30% worldwide fall in demand
Brent LCOc1 futures fell $1.36, or 4.1%, to settle at
$31.48 a barrel, while U.S. West Texas Intermediate (WTI) crude
CLc1 dropped $2.33, or 9.3%, to settle at $22.76.
"The collapse in oil prices is a result of the reality that
while OPEC is cutting as expected, there is simply too much
crude in the physical space for sale, with too few pipelines to
move it and too few buyers to take it," said Scott Shelton,
energy specialist at United ICAP.
OPEC+ had considered curbs as great as 15 million to 20
million barrels per day (bpd), or 15% to 20% of global supplies.
The possibility of deeper cuts sent oil prices surging nearly
10% early in the day.
However, OPEC said it would ease output cuts between July
and December to 8 million bpd and to 6 million barrels between
January 2021 to April 2022.
"A lot of hope got priced into this market over the past
several days," said John Kilduff, partner at hedge fund Again
Capital LLC.
OPEC+ said it would hold another video conference meeting on
June 10, to assess the market. Energy ministers from the Group
of 20 (G20) major economies are set to meet on Friday.
"We are expecting other producers outside the OPEC+ club to
join the measures, which might happen tomorrow during G20," the
head of Russia's wealth fund and one of Moscow's top oil
negotiators, Kirill Dmitriev, told Reuters.
A cut of 10 million bpd would be the biggest ever agreed by
OPEC, but Russia has insisted it will only reduce output if the
United States joins the deal.
Canada and Brazil are cutting output now due to market
forces, but Jason Kenney, premier of Alberta, Canada's largest
producing province, said it has already done its part.
The United States has not said it will mandate output
reductions. Instead, it has noted that market forces are already
causing producers to pull back, as it expects its output to fall
by nearly 2 million bpd by next year.
U.S. oil rigs in operation dropped by 58 this week to 504,
the lowest level since December 2016. The last OPEC meeting in early March ended acrimoniously,
with Russia and Saudi Arabia unable to come to an agreement to
curb output as the virus spread, adding to the slump in prices.
Meanwhile, the U.S. contract expiring in June rose to its
highest premium over the front month CLc1-CLc2 since 2009, a
signal that traders are worried that the U.S. would run out of
most onshore storage in a matter of weeks, traders said.