14 Feb 2020
Oil prices moved up on Friday and stayed on track for their first weekly gain since early last month.
The news was boosted by expectations that major producers would launch further output cuts to counter a demand slowdown in China due to the coronavirus.
Reuters reports Brent crude LCOc1 was up 6 cents or 0.1% at $56.40 a barrel by 0911 GMT, rising 3.4% since last Friday, its first weekly rise in six weeks.
U.S. West Texas Intermediate (WTI) CLc1 was 3 cents or 0.1% higher at $51.45 a barrel, up 2.2% for the week.
Edward Moya, senior market analyst at OANDA in New York commented: “Oil prices appear to have stabilised this week on optimism that OPEC+ will once again do whatever it takes to tighten output and on hope that the coronavirus peak is nearing.”
In answer to the demand slowdown, OPEC and its allies, known as OPEC+, are contemplating slashing output by as much as 2.3 million barrels per day.
Over 1,350 people have lost their lives due to the coronavirus, which has disrupted China’s economy and shaken energy markets. Since the start of the year, Brent has declined 15%.
That said, market sentiment was bolstered as Chinese factories reopened and the government eased monetary policy.
In addition, the World Health Organization reassured traders by claiming the increase in China’s reported cases was the authorities’ decision to reclassify a backlog of suspected cases, therefore didn’t signify a broader epidemic, the Reuters report adds.
The International Energy Agency stated that oil demand in Q1 is set to drop compared to the year before for the first time since the global financial crisis due to coronavirus.
ING analyst Warren Patterson commented: “Given the strength seen in the market this week, it suggests participants were factoring in even larger demand hits as a result of COVID-19 (the coronavirus).”
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