US not concerned by any new OPEC output cut, says Brouillette

Optimism in oil market is growing that we could see Beijing resume some normalcy in travel and trade outside of the Hubei province, says analyst. (Shutterstock)
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Updated 12 February 2020

US not concerned by any new OPEC output cut, says Brouillette

  • Oil prices rise to $54 a barrel on Tuesday, recovering from a 13-month low

VIENNA: The US is not concerned by moves being considered by OPEC and its allied producers to curb oil production further, US Energy Secretary Dan Brouillette said on Tuesday.

A technical panel that advises the Organization of the Petroleum Exporting Countries and its allies, led by Russia, have proposed an additional output cut of 600,000 barrels per day (bpd), three sources told Reuters last week.

OPEC is meeting next month in Vienna.

The group of producers, known as OPEC+, has already been implementing cuts of 1.2 million bpd since January 2019 to reduce the global supply glut and prop up crude prices.

“We’re not concerned about the decision that OPEC may make and whatever decision they make will be good for them and we appreciate what they’re doing,” Brouillette told reporters on the sidelines of a conference at the UN nuclear watchdog’s headquarters in Vienna.

“They’re going to meet and they’re going to make a determination and a decision that’s best suited for them but I think their ability to impact oil prices in the manner in which they did, you know, three, four, five decades ago is just fundamentally different,” Brouillette said.

Meanwhile, oil rose to $54 a barrel on Tuesday, recovering from a 13-month low as the number of new coronavirus cases slowed in China, easing some concerns about lengthy destruction of oil demand.

Brent crude rose $1.07 to $54.34 a barrel, having dropped on Monday to its lowest since January last year at $53.11. US West Texas Intermediate crude was up 89 cents at $50.46.

“The bottom seems to be in place for oil prices,” said Edward Moya, analyst at brokerage OANDA.

“Optimism is growing that we could see Beijing resume some normalcy in travel and trade outside of the Hubei province.”

Investors remain wary that China’s oil demand could take a further hit if the coronavirus cannot be contained and if OPEC and its allies, known as OPEC+, fail to agree on further steps to support prices.

“Though oil is recovering again today, the lack of any coordinated action by OPEC+ means that oversupply concerns are likely to retain the upper hand,” said Commerzbank analyst Eugen Weinberg.

Oil rose alongside a rally in world equities, which resumed their climb toward record highs on Tuesday on hopes the virus is peaking.


Saudi minister: OPEC+ will take responsible approach to virus

Updated 26 February 2020

Saudi minister: OPEC+ will take responsible approach to virus

  • Saudi Arabia supports the further oil production cut, but Russia is yet to announce its final position on the matter

RIYADH: Saudi Arabia’s energy minister said on Tuesday he was confident that OPEC and its partner oil-producing nations, the so-called OPEC+ group, would respond responsibly to the spread of the coronavirus.

He also said Saudi Arabia and Russia would continue to engage regarding oil policy.

“Everything serious requires being attended to,” the minister, Prince Abdul Aziz bin Salman, told reporters at an industry conference in Riyadh.

An OPEC+ committee this month recommended the group deepen its output cuts by an additional 600,000 barrels per day.

Saudi Arabia supports the further oil production cut, but Russia is yet to announce its final position on the matter.

The minister said he was still talking with Moscow and that he was confident of Riyadh’s partnership with the rest of the OPEC+ group.

“We did not run out of ideas, we have not closed our phones. There is always a good way of communicating through conference calls,” he said.

Regarding the coronavirus, which has impacted OPEC member Iran, he said OPEC+ members should not be complacent about the virus but added he was confident every OPEC+ member was a responsible and responsive producer.

The flu-like SARS-CoV-2 virus, which first broke out in China, has now spread to more than 20 countries.

“Of course there is an impact and we are assessing, but we’ll do whatever we can in our next meeting and we’ll address that issue,” UAE Energy Minister Suhail Al-Mazrouei said at the same industry conference.

Saudi Aramco CEO Amin Nasser on Monday said he expected a short-lived impact on oil demand.

“We think this is short term and I am confident that in the second half of the year there is going to be an improvement on the demand side, especially from China,” he said.

Oil climbed on Tuesday as investors sought bargains after crude benchmarks slumped almost 4 percent in the previous session, although concerns about the global spread of the virus capped gains.