Oil Price Fundamental Daily Forecast – OPEC+ Considering Further 500,000 bpd Oil Output Cut

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading mixed on Monday. The markets opened lower before edging higher as traders assessed the spread of China’s coronavirus and its potential impact on global economic growth and demand for crude. In January, the U.S. benchmark dropped nearly 16% while suffering its worst loss since May 2019.

At 12:27 GMT, March WTI crude oil is trading $51.71, up $0.15 or +0.29% and April Brent crude oil is at $56.46, down $0.20 or -0.35%.

Iran Concerned about Oil Demand

On Monday, Iranian Oil Minister Bijan Zanganeh said the spread of the coronavirus had hit oil demand and called for an effort to stabilize oil prices.

“The oil market is under pressure and (Brent) prices have dropped to under $60 a barrel and efforts must be made to balance it,” Zanganeh said.

He said Iran would agree to holding an earlier OPEC meeting if the rest of the group’s members agreed to oil production cuts. OPEC and its allies, a group known as OPEC+, are considering meeting in February instead of March.

OPEC+ Considering Further Production Cuts

OPEC and its allies are considering cutting their oil output by a further 500,000 barrels per day (bpd) due to the impact on oil demand from the coronavirus, two OPEC sources and a third industry source familiar with discussions said, and Reuters reported.

OPEC+ is considering holding a ministerial meeting on February 14-15, one of the OPEC sources said, earlier than a current schedule for a meeting in March.

Additionally, an OPEC and non-OPEC panel called the Joint Technical Committee (JTC) has scheduled a meeting for February 4-5 in Vienna to assess the impact of the virus on demand, other OPEC+ sources said. The technical panel is likely to make a recommendation on any further action to support the market, the sources said.

The partners are also discussing the duration of the cuts and separate OPEC sources said last week the group wanted to prolong the curbs until at least June.

Daily Forecast

Prices are being underpinned slightly by a more positive tone in world markets that have been gripped by worries over the economic fallout from the spread of the coronavirus.

Talk of additional production cuts or an extension of the current cuts has helped slow down the selling. Any positive news from OPEC+ is likely to trigger a short-covering rally, but with the virus spreading and uncertainty over the impact on China’s economy rising, any price rise is likely to be short-lived.