Oil’s rebound extended into a third day after OPEC+ experts recommended deeper production cuts to combat the demand hit from the coronavirus before the group meets later this week, APA reports citing Blomberg.
The Joint Technical Committee suggested an additional output reduction of 600,000 to 1 million barrels a day during the second quarter, according to delegates. Ministerial meetings are scheduled for Thursday and Friday in Vienna. That came after an emergency half-percentage point interest-rate cut by the Federal Reserve failed to revive U.S. stocks on Tuesday.
While the Organization of Petroleum Exporting Countries and its allies are widely expected to go ahead with additional output cuts, whether they will be enough to prop up prices given the magnitude of the consumption loss is uncertain. Goldman Sachs Group Inc. is forecasting demand will shrink by 150,000 barrels a day this year, the least since the global financial crisis.
“The market has been pricing in up to 1 million barrels-a-day of OPEC+ cuts,” said Vandana Hari, founder of Vanda Insights in Singapore. “Producers will have to deliver a bigger surprise at the meeting if they hope to prop up oil prices further.”
West Texas Intermediate futures for April delivery rose 74 cents, or 1.6%, to $47.92 a barrel on the New York Mercantile Exchange as of 11:35 a.m. in Singapore after climbing as much as 2.1%. The contract has advanced around 7% since Friday after plunging 16% last week.
Brent futures for May increased 1.6% to $52.70 a barrel on the ICE Futures Europe exchange. The global crude benchmark traded at a premium of $4.61 to WTI for the same month.