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Friday 7 February 2020

Potential OPEC+ Output Cuts amid Coronavirus Epidemic

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LONDON (Reuters) — Oil prices edged higher on Friday on hopes OPEC and other producers may cut their output further amid falling demand for crude as China battles the coronavirus epidemic.

A panel advising the Organization of the Petroleum Exporting Countries and allies led by Russia, known as the OPEC+ group, suggested provisionally cutting output by 600,000 barrels per day (bpd), three sources told Reuters on Thursday.

Russian Foreign Minister Sergei Lavrov said on Thursday Moscow supported cooperation with other producers. Energy Minister Alexander Novak said on Friday Russia needed a few days to analyze the oil market and would clarify its position on deeper cuts next week.

Oil prices have fallen by more than a fifth since the outbreak of the virus in the city of Wuhan in China. Brent crude LCOc1 futures rose ¢30, or 0.6%, to $55.23 a barrel by 09:45 GMT, but were heading for a fifth weekly loss due to lingering fears over the impact of the virus. U.S. West Texas Intermediate (WTI) crude CLc1 futures were up ¢21, or 0.4%, at $51.16 a barrel, also heading for a fifth consecutive week of losses. JPMorgan cut its estimate for Brent to average $60.40 a barrel in 2020, down $4.1 from its earlier forecast.

The OPEC+ group, which pumps more than 40% of the world’s oil, has been withholding supply and agreed to deepen the cuts by 500,000 bpd from the start of this year, to 1.7 mln bpd, nearly 2% of global demand.

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