Oil rises as OPEC, allies work on big cut
Brent oil prices rose on Wednesday on expectations that major producers have moved closer to an agreement to enact deeper output cuts aimed at offsetting the slump in demand caused by the coronavirus outbreak.
Brent crude was up by 30 cents, or 0.6%, at $52.16 a barrel . It had risen more than $1 earlier in the session.
U.S. West Texas Intermediate was up by 32 cents, or 0.7%, at $47.50 a barrel. The contract had gained 98 cents earlier in the session.
Saudi Arabia and other OPEC members are seeking to persuade Russia on Wednesday to join them in large additional oil output cuts to prop up prices which have tumbled because of the coronavirus outbreak.
A technical panel of several representatives from OPEC states, Russia and other producers recommended on Tuesday cutting output by as much as an extra 1 million barrels per day during the second quarter only.
The bank said while an output cut by OPEC “will help normalize oil demand and inventories later this year, they can’t prevent an already started large oil inventory accumulation.”
Morgan Stanley also cut its second-quarter 2020 Brent price forecast to $55 per barrel and its WTI outlook to $50 on expectations that China’s 2020 oil demand growth would be close to zero and that demand elsewhere may weaken because of the virus.
The U.S. Federal Reserve cut interest rates on Tuesday in a bid to shield the world’s largest economy from the impact of the coronavirus, but the decision offered only limited support for crude.
U.S. crude oil inventories rose in the most recent week, while gasoline and distillate stocks fell, data from industry group the American Petroleum Institute showed on Tuesday.
Crude inventories rose by 1.7 million barrels in the week to Feb. 28 to 446.6 million barrels, compared with analysts’ expectations for a build of 2.6 million barrels.