By Alex Longley

Mar 5, 2020

(Bloomberg) Oil traded near $47 a barrel in New York as OPEC ministers laid the ground for a large production cut, without first overcoming Russia’s opposition to the move.Crude swung between gains and losses as details of the proposal emerged. Ministers meeting in Vienna backed a 1.5 million-barrel-a-day reduction, but it became clear that the plan is contingent on Russia’s support, which is so far not evident. OPEC also slashed its demand growth forecast for the year.

OPEC's production has declined to lowest since mid 2009

The outcome “all depends on Russia now,” said Commerzbank AG analyst Carsten Fritsch. “OPEC is building up maximum pressure to join. Today’s meeting was easy; crunch-time comes tomorrow.”

West Texas Intermediate futures for April delivery slipped 8 cents to $46.70 a barrel on the New York Mercantile Exchange as of 9:06 a.m. local time. Brent futures for May dropped 0.3% to $50.99 a barrel on the ICE Futures Europe exchange.

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The Organization of Petroleum Exporting Countries agreed it should cut daily crude output by 1 million barrels in the second quarter, with further curbs of 500,000 barrels coming from non-OPEC allies, according to a statement. But Russian Energy Minister Alexander Novak left Vienna on Wednesday without backing such a proposal, and won’t return to negotiations until Friday.

After the talks on Thursday, Iranian Oil Minister Bijan Namdar Zanganeh conceded there’s no plan B if Russia doesn’t agree.

Oil producers are struggling against a weakening demand outlook, the like of which hasn’t been seen in years. When OPEC released its supply and demand model in early February, it pegged global oil-consumption growth this year at 990,000 barrels a day. Now the group sees growth at just 480,000 barrels a day, due to the impact of the coronavirus.

Other oil-market news
Global oil demand could drop in 2020 due to the virus outbreak, Equinor CEO Eldar Saetre said in an interview. “There’s a high level of uncertainty and a broad range of outcomes,” he said. South Korea’s largest refiner said it will cut crude consumption by between 10% and 15%, highlighting the market’s demand malaise. Exxon Mobil Corp. is slowing the pace of its flagship development in the Permian, one of the first signs that oil majors are throttling back on production in response to the recent price slump. Observers who were left scratching their heads when Norway’s oil production fell short of the official target in January now have an answer.

Other oil-market news

Global oil demand could drop in 2020 due to the virus outbreak, Equinor CEO Eldar Saetre said in an interview. “There’s a high level of uncertainty and a broad range of outcomes,” he said.
South Korea’s largest refiner said it will cut crude consumption by between 10% and 15%, highlighting the market’s demand malaise.
Exxon Mobil Corp. is slowing the pace of its flagship development in the Permian, one of the first signs that oil majors are throttling back on production in response to the recent price slump.
Observers who were left scratching their heads when Norway’s oil production fell short of the official target in January now have an answer.