Oil Prices Rise on Hopes for Deeper Output Cuts

Crude rates grew on Wednesday, propelled by news that OPEC and its allies are considering new output slashes to offset a potential restraint on global oil demand resulting from China’s coronavirus outbreak.

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The international Brent crude oil futures with April delivery jumped by 1.04 percent, to $54,52 per barrel, while WTI futures with March delivery gained 1.03 percent, to $50,12 per barrel at 0835 GMT.

The OPEC and its producer allies were assessing the Wuhan virus impact on global oil products demand in the framework of Tuesday’s meeting.

Producers are discussing the possible deeper crude output cuts and moving a scheduled policy meeting to February from the previously planned session in March.

Concerns of a virus-related tumble in global demand have blown slightly the oil market into contango this week – a scenario when longer-dated oil futures are trading at a premium line that bolsters traders to keep crude in inventories for further more profitable resale, potentially posting months of surplus.

Meantime, U.S. crude oil reserves grew by 4.2 million barrels in the week, which ended on January 31 to 432,9 million barrels, as it followed from API report, released on Tuesday. Analysts expected only 2.8 million barrels rise. 

Market participants await the official EIA report, that is due later on Wednesday.

Source: Reuters