Oil falls near $50 as coronavirus hits demand without OPEC action
Oil briefly fell past the psychologically important $50 a barrel mark as hopes for an extraordinary OPEC+ meeting to decide on further production cuts to deal with the demand hit from the coronavirus diminished.
Ministers from the group and its allies are unlikely to hold an early meeting this month, while one planned for March will go ahead, Azerbaijan Energy Minister Parviz Shahbazov told the RIA Novosti newswire. Russia has been resisting Saudi Arabian efforts to reduce output after OPEC+ technical experts recommended an additional cut of 600,000 barrels a day through June.
Crude has tumbled around 10% over the past three weeks as the virus wreaked havoc on the economy of the world’s biggest oil importer, with Chinese refineries cutting the amount of crude they’re processing by around 15%. Prices could come under further pressure if talks aimed at ending the conflict in Libya, where a blockade of ports has pushed production to the lowest level since 2011, lead to a restoration of output.
Should OPEC fail to reach an agreement to cut supply, there could be additional downside to prices, Stephen Innes, Asia Pacific market strategist at AxiCorp, said in a note. A drop in U.S. drilling activity will be required to make a sufficient dent in global oil supplies, he said.
West Texas Intermediate crude for March fell 0.5% to $50.07 a barrel on the New York Mercantile Exchange as of 9:37 a.m. in Singapore after dropping as much as 1.5% earlier. It closed 1.2% lower on Friday.
Brent for April delivery declined 0.4% to $54.27 on the London-based ICE Futures Europe exchange. The global crude benchmark traded at a $3.97 premium to WTI for the same month.