Oil Steady as Asian States Seek to Offset Virus Impact | Rigzone
(Bloomberg) — Oil steadied around $57 a barrel in London as China and others in Asia promised economic stimulus to offset the impact of the coronavirus, buoying the outlook for fuel demand.
Prices recovered more than 5% last week, the biggest gain since September, as some of the fears over how far the infection will hurt the global economy abated. China, Hong Kong and Singapore have pledged extra fiscal stimulus to counter the economic hit from the disease, with Beijing considering measures such as lowering corporate taxes.
“Oil appears to have finally shaken off its bearish malaise,” said Stephen Brennock, an analyst at PVM Oil Associates Ltd. “Investors cheered a salvo of stimulus measures from China’s central bank aimed at mitigating the economic impact.”
Brent for April settlement rose 35 cents to $57.67 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for March delivery increased 28 cents to $52.33 a barrel on the New York Mercantile Exchange, after last week gaining by the most since December. There was no WTI settlement on Monday because of Presidents Day holiday.
China on Monday offered more funding to banks and cut the interest rate it charges for the money. Singapore has also promised a “strong” package of budget measures and central banks in the Philippines, Thailand and Malaysia have cut interest rates as Asian economies grapple with the virus-induced slowdown.
That’s offsetting any disappointment from OPEC and its partners apparently dropping plans for an emergency meeting to respond to the crisis. Russia, a pivotal member of the alliance known as OPEC+, has so far resisted a push by Saudi Arabia to launch fresh production cuts in response to the loss of demand.
Traders are now likely to focus on whether the coalition announces new cutbacks at its scheduled meeting on March 5 and 6. A technical committee recommended earlier this month that the group reduce supply by a further 600,000 barrels a day, on top of current curbs.
Concerns over the impact of the virus remain strong with Hubei, the Chinese province at the epicenter of the outbreak, reporting new cases and additional deaths. This is seeping into the oil market with the International Energy Agency forecasting global oil demand will decline this quarter for the first time in more than a decade. Goldman Sachs Group Inc. slashed its 2020 crude-consumption forecast almost in half and lowered its first-quarter price estimate by $10 a barrel.
Other oil-market news:
- Hedge funds kept their bets against WTI crude little changed in the week ended Feb. 11, data released Friday showed. But their overall stance is still the most pessimistic since November.
- The coronavirus is taking a hefty toll on Russia’s ESPO Blend oil, a favorite among Chinese refiners.
- SK Innovation, South Korea’s biggest oil refiner, will buy more American crude this year amid increasing U.S. production, Suh Sokwon, CEO of the company’s trading unit said.
–With assistance from James Thornhill, Serene Cheong, Saket Sundria and Amy Stillman.
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