* OPEC+ agrees deal to reduce output by 9.7 mln bpd -sources
* Cuts equal to about 10% of global supply, but demand falls
more
* Saudi minister: effective cuts amount to 19.5 mln bpd
* WTI second-month premium over front-month highest since
Feb 2009
(Adds latest prices, quote)
By Scott DiSavino
NEW YORK, April 13 (Reuters) - Oil prices were mixed on
Monday, as the historic production-cut deal inked by major
global oil producers was not enough to assuage existing worries
about the demand destruction brought on by the coronavirus
pandemic.
Brent LCOc1 futures rose 26 cents, or 0.8%, to settle at
$31.74 a barrel, while U.S. West Texas Intermediate (WTI) crude
CLc1 slipped 35 cents, or 1.5%, to settle at $22.41, its
lowest since April 1. Earlier in the day WTI was up over 5%.
The Organization of the Petroleum Exporting Countries, along
with Russia and other countries - known as OPEC+ - agreed over
the weekend to cut output by 9.7 million barrels per day (bpd)
in May and June, representing about 10% of global supply.
In addition, several other countries will reduce output as
well, for an estimated total cut of about 19.5 million bpd.
"The oil market's tepid response to the OPEC+ agreement
appeared appropriate," said Jim Ritterbusch, president of
Ritterbusch and Associates in Galena, Illinois. "The deal looked
like a last minute desperation attempt to throw a shock at the
market but one that has failed thus far given the magnitude of
demand deterioration."
Worldwide fuel consumption is down roughly 30% because of
the COVID-19 pandemic that has killed more than 110,000 people
worldwide and kept entire nations on lockdown. That is expected to result in an overhang of supply for
months or years even with the production cuts. That may limit
oil-price gains even after the OPEC+ deal, which took several
days of negotiations to complete.
"The problem is that the short-term hit to demand is likely
around the 30 million bpd area, oversupplied conditions remain
in place," said Edward Moya, senior market analyst at OANDA in
New York. "Crude demand will not return to normal levels until
2022."
Saudi Energy Minister Prince Abdulaziz bin Salman said
nations in the G20 group had pledged to cut about 3.7 million
bpd and that strategic reserves purchases would reach roughly
200 million barrels over the next couple of months, bringing the
total reduction to about 19.5 million bpd. Saudi Arabia, Kuwait and the United Arab Emirates
volunteered to make cuts even deeper than those agreed, which
would effectively bring down OPEC+ supply by 12.5 million bpd
from current levels. The kingdom on Monday also set its May official selling
prices (OSP) for crude, selling oil to Asia more cheaply and
keeping prices flat for Europe while raising them for the United
States. Still, analysts cast doubts on producers' likely compliance
with the production cuts, not least since Mexico got off with
smaller cuts than initially demanded.
Outside of OPEC+, Canada has signalled a willingness to cut
and Norway said it would decide about its cut "in the near
future." The United States, where antitrust legislation makes it hard
to act in tandem with groups such as OPEC, has said that low
prices mean its output would already fall by as much as 2
million bpd this year without planned cuts.
Oil markets continued to signal near-term oversupply,
despite optimism over the longer-term impact of the OPEC+ cuts.
Front-month U.S. crude futures for delivery in May traded as
much as $6.96 below futures for delivery in June CLc1-CLc2 ,
the biggest gap since February 2009. The contango - where
later-dated prices are higher than prompt prices - in that
spread signaled concerns that Cushing, the delivery point for
benchmark U.S. crude futures, might fill up in coming weeks.
Inventories at the hub rose by about 5.4 million barrels in
the week through Friday, traders said, citing Genscape data.
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Brent 6-month contango steeper after global output cut deal https://reut.rs/2VtwIwm
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