Oil rises as OPEC backs deeper supply cuts

LONDON (Reuters) – Oil rose on Thursday after major producers agreed on deeper output cuts to bolster prices as worries intensify over the fast-spreading coronavirus outbreak and its impact on the global economy and crude consumption.

Brent crude LCOc1 rose by 19 cents, or 0.4%, to $51.32 a barrel by 1133 GMT. U.S. West Texas Intermediate (WTI) CLc1 was up 15 cents, or 0.3%, at $46.93.

OPEC agreed to cut output by an extra 1.5 million barrels per day (bpd) in the second quarter of 2020 but made it conditional on Russia joining the pact, two OPEC sources said.

Russia, however, has so far indicated that it would back an extension rather than deeper production cuts.

“Oil prices are trading slightly higher as Opec seems to have agreed to an even higher additional production cut than has being circulating in previous days,” said UBS oil analyst Giovanni Staunovo.

“That said, the price increase is modest, as Russia won’t be back at the negotiating table until Friday.”

(Graphic: OPEC production vs. world demand – here)

Prices were supported by a lower than expected rise in crude oil inventories in the United States, alleviating some concern about oversupply in the world’s biggest oil consumer.

U.S. crude stocks rose modestly last week – less than analysts had expected – while U.S. oil exports rose to more than 4 million bpd for the first time since December, suggesting a rise in overseas demand. [EIA/S]

Concern over demand growth remains, however. The head of the International Monetary Fund said that the global spread of the virus has crushed hopes for stronger economic gains this year.

China’s top gas importer, PetroChina (601857.SS), has declared force majeure on natural gas imports because of the coronavirus outbreak.

The company issued the notice, which allows the suspension of contractual obligations because of exceptional circumstances, to suppliers of piped gas and to at least one liquefied natural gas supplier, though details could not be confirmed immediately.

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