Oil prices were steady on Friday, but set for their first weekly gain in six weeks on the assumption that major producers will implement deeper output cuts to offset slowing demand in China caused by the coronavirus epidemic.
Slowing global demand had already resulted in cuts by OPEC members and cutting production further, without any appreciable increase in prices, will hurt member nations severely
This research report was first published to subscribers of Boslego Risk Services February 10, 2020.
Oil prices were steady on Friday but are set for their first weekly gain in six weeks on the assumption major producers will implement deeper output cuts to offset slowing demand in China, the world’s second-largest crude user.
At 9:33 am Singapore time (0133 GMT), April ICE Brent crude futures dipped 7 cents/b (0.12%) from Thursday’s settle to $56.27/b, while the NYMEX March light sweet crude contract was stable at $51.42/b.
Oil headed for its first weekly gain since early January after prices found a floor amid uncertainty over how the coronavirus will play out and whether OPEC+ will respond with additional production cuts.
Business groups and organized labor called on the Canadian government to intervene to stop the blockades, which involve protesters acting in solidarity with west coast indigenous leaders trying to stop construction of a natural-gas pipeline.
Following the pattern set for all previous quarters of 2019, estimates of oil demand and year-on-year growth in the final quarter are now being cut as hard data become available.
Everyone agrees that the novel coronavirus (Covid-19) that has shut down large parts of China’s industry and brought travel to a virtual halt in parts of the country will hit the world’s demand for oil hard. But the three big forecasting agencies are far apart on how severe that impact will be and what it means for 2020 oil balances.
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