Oil is growing because the market is in anticipation of OPEC+ measures in relation to falling demand due to the spreading coronavirus.
A non-planned meeting of the Technical Committee will be held on 4-5th February. The participants will discuss the issue of necessity to urgently schedule a meeting of the ministers of the cartel member countries. Perhaps, there will be only the meeting of the OPEC leaders – Russia and the Saudi Arabia.
At 8 a.m. Moscow time, Brent contracts for April (on London-based ICE Futures) rose 30 cents to $ 54.75. On Monday, quotes fell by almost 4%, and trading closed at 54.45 US dollars per barrel.
At the same time, on NYMEX, futures of the American WTI rose by more than 40 cents and amounted to $ 50.55. Previous trading was not very successful, so the price fell by almost $ 1.5 and stopped at $ 50.1. The American oil quotes have been declining since January 6th. The drop has amounted to 20%.
There are some suggestions to be discussed at the meetings. It is about an overall production cut by half a million barrels until the situation with coronavirus is stabilized. And there is one more suggestion: the reduction in production only by Saudi Arabia by one million barrels per day.
Due to the epidemic, oil demand in China has declined by 3 million bpd. This is approximately 20% of the country’s overall consumption.
Chinese authorities are also expected to revise their forecast for the economic growth. The forecast is published in March. Most likely, this year it will be significantly lower than 6%.
According to the State Committee of China, on February 3, 20.5 thousand cases of coronavirus diseases were identified in the country. There are already 425 deaths.
The material was prepared with the participation of Katya Wilson,
a leading analyst of the brokerage company UFT Group