OPEC To Review Oil Price Fall Following Coronavirus Epidemic

Tuesday, 04 Feb, 2020

"WHO's decision.to oppose restricting travel and trades against China boosted market confidence, even though the organization declared a global health emergency", said Margaret Yang, market analyst at CMC Markets.

U.S. West Texas Intermediate (WTI) fell 4 cents to $52.12 a barrel, down 3.8% on the week. It could force the hand of OPEC and its allies, which are considering an emergency meeting to cut production and staunch the decline in prices, which are headed for the lowest close in four months.

"Houthi drone launches into the Jazan region are a dime a dozen, and the refinery located in the region is not of critical importance", said Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA.

The number of infections in a health crisis that is forecast to sharply dent China's economy, the world's second-largest, has already surpassed the total in the 2002-2003 Severe Acute Respiratory Syndrome (Sars) epidemic.

Crude oil selloff intensifies on Monday amid demand concerns.

Brent crude futures jumped 90 cents to $59.19 a barrel by 0243 GMT, after falling 2.5 percent the previous session.

Ellen Wald, president of Transversal Consulting, said that although the long-term impact of the coronavirus is unclear, the market is nevertheless being "weighed down by fears of demand destruction". The contract fell 2.2% on Thursday and is now 2.5% lower for the week.

The price falls have however raised eyebrows at the Opec oil exporters' cartel, whose 13-member nations pump 40 per cent of global crude and are anxious to safeguard revenues. The U.S. Centers for Disease Control and Prevention says it's preparing for the disease to become a pandemic and is working to get emergency approval for a test for the virus, which has nearly 17,400 confirmed cases and claimed over 360 lives. Only an additional OPEC cut could change things, " Jakob said.

"The oil market is under pressure and prices have dropped to under $60 a barrel and efforts must be made to balance it", Iran's oil minister, Bijan Zanganeh, said.

Despite the Saudi prodding, the cartel and 10 allied nations led by Russian Federation stopped short of scheduling an emergency meeting of its full delegation this week and will instead hold a technical meeting to access the virus' impact and make recommendations to members.

According to consultants at Energy Aspects Ltd., OPEC is considering an informal proposal to deepen current production curbs by about 500,000 barrels a day.