Futures Movers: Oil prices extend gains to a second straight day as traders watch for global action on coronavirus

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Oil futures climbed again Tuesday, partly boosted by hope for coordinated efforts by global central banks and governments to address the novel coronavirus outbreak. Prices also were gathering support from expectations for a further cut to oil production by OPEC and its allies at a meeting later this week.

“Firstly, traders are hoping that the upcoming OPEC+meeting is going to bring good news for them. They are expecting a supply cut because Russia has agreed to this,” said Naeem Aslam, chief market analyst at AvaTrade.

“Finally, the hopes of a coordinated action by central banks to rescue the global economy are also having a positive influence on the price,” he wrote.

April WTI crude futures CLJ20, +2.44%  were $1.06, or 2.3%, higher at $47.81 a barrel on the New York Mercantile Exchange, after surging 4.5% on Monday.

The global benchmark, May Brent crude BRNK20, +2.18%, advanced 97 cents, or 2%, at $52.94 a barrel on ICE Futures Europe, after a 4.5% rally for the oil grade.

A Tuesday statement from Group of Seven financial ministers indicated a willingness to use fiscal and monetary policy to fight the coronavirus impact on the economy but the statement didn’t outline specific steps.

Meanwhile, ministers from the Organization of the Petroleum Exporting Countries were gathering early in Vienna ahead of a key March 5-6 meeting for OPEC and its allies to help determine the magnitude of cuts to output that might be needed to combat coronavirus, according to Reuters.

The Wall Street Journal reported Monday that de facto OPEC leader, Saudi Arabia, has offered a compromise for Russia and other countries that have been reluctant to adopt deeper cuts to production.

Riyadh has proposed that OPEC+, a group including members of the cartel and other major producers like Russia cut crude output by 600,000 barrels a day and, along with Saudi Arabia, take on the bulk of individual cuts, reducing its output by an additional 400,000 barrels a day.

Leonid Fedun, vice president of Russia’s second-largest oil producer Lukoil, on Tuesday told Reuters that a 1 million barrel per day additional cut would be enough to balance the market and lift oil prices back to $60 a barrel. The comments come after Russia’s President Vladimir Putin said Sunday that he’s ready to cooperate with OPEC+ partners, and believes the group can help keep long-term oil prices stable.

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