Oil falls, OPEC backs deeper cuts

Oil falls, OPEC backs deeper cuts
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Saudi Energy Minister Prince Abdul Aziz bin Salman arrives on Thursday for a meeting of the Organization of the Petroleum Exporting Countries in Vienna. (AP)
Oil falls, OPEC backs deeper cuts
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Red Cross medics measure the temperature of participants of the 178th Organization of Petroleum Exporting Countries (OPEC) meeting in Vienna, Austria, on March 5, 2020. (AFP / ALEX HALADA)
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Updated 06 March 2020

Oil falls, OPEC backs deeper cuts

Oil falls, OPEC backs deeper cuts
  • Major crude producers agree on bigger reduction in output to bolster prices during Vienna meeting

LONDON: Oil fell on Thursday as the coronavirus epidemic showed no signs of slowing, with deaths mounting globally, and while major producers agreed on deeper output cuts to bolster prices, they could not immediately secure Russian support for the decision.

Brent crude fell by 37 cents, or 0.7%, to $50.76 a barrel by 1442 GMT. US West Texas Intermediate (WTI) was down 14 cents, or 0.3 percent, at $46.64.

OPEC agreed to cut oil output by an extra 1.5 million barrels per day (bpd) in the second quarter of 2020 to support prices that have been hit by the coronavirus outbreak, but made its action conditional on Russia and others joining in.

 

Extension

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

“The uncertainty surrounding the outcome of the OPEC+ meeting is weighing on oil prices,” said Commerzbank analyst Carsten Fritsch.

Russian Finance Minister Anton Siluanov said Moscow was prepared for a possible drop in oil prices should OPEC and its allies fail to reach an agreement over cutting supply.

“The key will be the OPEC+ communique that is articulated to the market once the meetings conclude, to gauge whether the wording signals a collective harmonious voice among the group that plausibly helps to rebalance oil markets, or whether it’s merely complex face-saving maths,” Ehsan Khoman, head of MENA research and strategy at MUFG, said. Oil demand has been hit hard by the coronavirus outbreak. Original forecasts for growth in crude demand in 2020 have been slashed, as factory operations, travel and other economic activities around the world have been curtailed by measures aiming to stop the
virus spreading.

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

US crude stocks rose modestly last week — less than analysts had expected — while US oil exports rose to more than 4 million
bpd for the first time since December, suggesting a rise in overseas demand.

 

Economic gains

Concern over demand growth remains, however. 

The head of the International Monetary Fund said the global spread of the virus has crushed hopes for stronger economic gains this year.

China’s top gas importer, PetroChina, 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.


Goldman Sachs nudges U.S. growth forecast higher on Biden stimulus plan

Goldman Sachs nudges U.S. growth forecast higher on Biden stimulus plan
Updated 17 January 2021

Goldman Sachs nudges U.S. growth forecast higher on Biden stimulus plan

Goldman Sachs nudges U.S. growth forecast higher on Biden stimulus plan
  • The bank expects economic growth of 6.6% in 2021
  • Biden outlined a $1.9 trillion stimulus package proposal on Thursday

Analysts at Goldman Sachs Group raised their U.S. growth forecast for the second time this month on expectations that President-elect Joe Biden’s fiscal stimulus plan will hasten the economy’s recovery from the COVID-19 pandemic.
The bank expects economic growth of 6.6% in 2021, compared with a previous forecast of 6.4%, according to a report published on Saturday. It also raised forecasts for how much stimulus the new administration will be able to push through in the near-term, to $1.1 trillion from $750 billion.
Biden outlined a $1.9 trillion stimulus package proposal on Thursday, saying bold investment was needed to jump-start the economy and accelerate the distribution of vaccines to bring the coronavirus under control.
“Larger boosts to disposable income and government spending imply stronger growth later in the year,” the bank’s analysts wrote.