Firm on Increasing Optimism Over OPEC+ Production Cuts

The Covid-19 outbreak will slow the growth in oil demand this year Opec says

The steady pricing comes on the heels of the Organization of the Petroleum Exporting Countries (OPEC) lowering its 2020 demand forecast for its crude by 200,000 barrels per day (bpd) on Wednesday. "... The consequences of COVID-19 for global oil demand will be significant".

While the brief SARS epidemic of 2003 has at times been used as a reassuring point of comparison, China's economy has changed enormously since then.

"There is already a major slowdown in oil consumption and the wider economy in China", the IEA said.

Oil demand in China, the world's second-largest crude consumer, has plunged because of travel restrictions to and from the country and quarantines within it. Hubei Province, the epicentre of the outbreak, said on Thursday that the number of new confirmed cases there jumped by 14,840 to 48,206 on February 12 and deaths climbed by a daily record of 242 to 1,310.

Oil refiner China National Chemical Corp said on Thursday that it would close a 100,000 bpd plant and cut processing at two others amid falling fuel demands.

OPEC, at its December meeting, agreed to reduce output by an additional 500,000 barrels per day through the first quarter.

China's coronavirus death toll surpasses 1400, but fewer new cases
Some 80,000 medical workers were involved in combating the epidemic in Wuhan , the city government said earlier this month. Japan confirmed its first coronavirus death on Thursday - a woman in her 80s living in Kanagawa prefecture near Tokyo.

"The effect of the Covid-19 crisis on the wider economy means that it will be hard for consumers to feel the benefit of lower oil prices", the report concludes. Its oil demand has nearly doubled since 2003 and represented more than three-quarters of global oil demand growth previous year.

"The main reason behind the oil demand growth revision and hence the demand for OPEC crude, is the outbreak of the Coronavirus and its expected impact on China's oil demand and, by extension, global oil demand", OPEC's Monthly Oil Market Report said.

The IEA estimates that the demand for OPEC crude has dropped from 29.4 million barrels per day (mbd) in the final quarter of 2019 to 27.2 mbd in the first three months of this year.

At the end of a year ago, OPEC and its allies including Russian Federation, called OPEC+, agreed to further cuts in oil production in order to compensate for rising production in the United States and avoid excess supplies that would depress prices.

It noted that this is 1.7 mbd below what what OPEC produced in January when the new production cuts came into force.

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