Oil steadies after Russia asks for time to decide on output cuts

Oil fluctuated after giving up prior gains as an OPEC+ committee recommended output cuts, but didn’t reach a decision on an emergency meeting amid Russia resistance.

Futures in New York were little changed Thursday after the panel recommended curbing production by 600,000 barrels a day to offset the demand impact from the coronavirus outbreak. But the committee failed to set a date for an emergency meeting in February to implement the suggestion after Russia asked for more time.

“There’s a little bit of hope OPEC will support the market,” said Michael Loewen, director of commodity strategy at Scotiabank. “Even before the virus, OPEC’s prior production cuts still left markets oversupplied and Russia has been reluctant to stick to these, so that also casts doubt on what they’re willing to do here.”

Crude is down about 17% this year as the spread of the virus disrupts travel and fuel consumption, upending trade flows worldwide. The oil market’s structure also deepened further into a bearish contango this week, suggesting ample supply will persist. Major companies from BP Plc to Total SA expect the disease to wipe out up to a third of global demand growth in 2020, but OPEC itself has predicted a more modest decline even in its worst-case scenario.

West Texas Intermediate crude advanced 0.2% to $50.86 a barrel on the New York Mercantile Exchange as of 11:04 a.m. local time, after earlier gaining as much as 2.9%.

Brent traded 30 cents lower at $54.98 on the London-based ICE Futures Europe exchange.

Oil prices rallied earlier in the day after proposals by China to lower tariffs on U.S. goods, effective Feb. 14. On the same day, the U.S. said it will also implement reductions in levies on Chinese products.

“With millions in quarantine due to the coronavirus and its economic slowdown, China is going to be cutting back on oil imports anyway, making the cut in tariffs less significant in lifting oil purchases,” said John Driscoll, chief strategist at JTD Energy Services Ltd.