WED, MARCH 04 2020-theG&BJournal- Members of the Organisation of the Petroleum Exporting Countries (OPEC) will be meeting in Vienna, Austria (March 5-6) to agree on a deeper round of oil production cuts, on the back of concerns about the outbreak of the Coronavirus and the risk of softening oil demand and a further weakening in refining margins, particularly in the Asia Pacific and Europe, along with easing geopolitical tensions in the Middle East.
The energy alliance between Saudi Arabia and Russia is expected to dominate discussions as well between OPEC and non-OPEC producers led by Russia.
Reports say Saudi Arabia and some key members of OPEC are pushing for an output cut of up to 1 million barrels per day.
In early February, the OPEC Joint Technical Committee (JTC) had recommended extending voluntary adjustments under the ‘Declaration of Cooperation’ process until the end of 2020 and to proceed with an additional adjustment until the end of the second quarter.
The JTC’s recommendations come in response to the fact that the coronavirus epidemic “has had a negative impact on oil demand and oil markets,” the President of the Conference, The Minister of Energy of Algeria and President of the OPEC Conference in 2020, HE Mohamed Arkab, said.
The Committee also recommended a further adjustment in production until the end of the second quarter of 2020. The Minister stressed that he “supports the conclusions of the JTC.”
Oil prices have fallen further as the COVID-19 spread across the globe. The Brent Crude fell 25% and West Texas Intermediate (WTI) traded down over 30% from its peak in early February since September 2019- supported then by positive momentum following the US and China’s announcement of an interim trade deal, which would help ease trade tensions and support the global economy. In addition, prices received some support from escalating geopolitical tensions in the Middle East.
Brent Crude traded at $52.44 Wednesday morning, up over 1%, while the U.S. WTI traded at $47.75, around 1.2% higher.
OPEC revised downward its outlook in February to 0.99 million bpd in 2020, citing coronavirus as the major factor.
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