Tuesday, March 3, 2020

Oil Recoups Half of Last Week’s Plunge as G-7, OPEC+ Get Serious

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Photographer: Ali Mohammadi/Bloomberg
Markets

Oil Recoups Half of Last Week’s Plunge as G-7, OPEC+ Get Serious

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Updated on

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    G-7 finance ministers to hold teleconference later on Tuesday
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    WTI jumps as much as 3.9% after surging 4.5% on Monday


Oil extended its rebound from last week’s slump as global policy makers pledged to safeguard markets from the coronavirus, while OPEC and its allies are expected to deepen production cuts.
Futures in New York have now recouped almost half of last week’s 16% plunge in a dramatic reversal that’s come amid a broad move upward in financial markets driven by signs major economies will act to soften the impact from the virus. Group of Seven finance ministers and monetary officials will speak by teleconference on Tuesday, while OPEC+ meets in Vienna from Thursday.

Oil is the most volatile since January 2019

All but two of 29 analysts, traders and brokers in a global poll predicted that the Organization of Petroleum Exporting Countries and its allies will announce new curbs, with an average expectation of 750,000 barrels a day. Whether that’s enough to stabilize the market and rein in oil volatility -- which has surged to highest in more than a year -- remains to be seen.
“The coordination among global finance ministers and a possible synchronized monetary easing among central banks have raised the level of reassurance in the market,” said Howie Lee, an economist at Oversea-Chinese Banking Corp. in Singapore. “If OPEC+ cuts production by 1 million barrels a day this week, it will push prices higher in the short term.”
West Texas Intermediate futures for April delivery rose 2.5% to $47.92 a barrel on the New York Mercantile Exchange as of 10:58 a.m. in Singapore. The contract surged 4.5% on Monday, the most since mid-September.
Brent futures for May climbed 2.3% to $53.09 a barrel on the ICE Futures Europe exchange after a 4.5% jump on Monday. The global crude benchmark traded at a premium of $5.02 to WTI for the same month.
U.K. and Japanese central banks pledged to act as necessary to ensure stable financial markets, while leaders of the International Monetary Fund and the World Bank said they stood ready to help member nations. The OECD warned that the world economy now faces its “greatest danger” since the global financial crisis more than a decade ago.
OPEC and its allies will gather in the Austrian capital on Thursday and Friday. The average estimate in the Bloomberg survey is only slightly above the 600,000 barrel-a-day cut recommended by the organization’s technical committee last month. Russia’s energy minister said Monday that the country is focusing on that recommendation and hasn’t received any proposal from OPEC+ for a larger cut.
OTHER OIL-MARKET NEWS:
  • The oil market just had its worst week since the financial crisis and petroleum demand is expected to tumble next quarter -- but that isn’t stopping the Trump administration from selling millions of barrels of government crude.
  • Already struggling with weak demand for diesel, jet fuel and gasoline, Asian refiners look set to be hit by a deluge of Chinese supply.
  • SK Innovation Co., South Korea’s biggest refiner, will cut run rates at its Ulsan complex by 5-10% in March and April as the coronavirus crimps demand and processing margins, according to people who asked not to be identified.
  • Crude futures rose 3.2% to 373.5 yuan a barrel on the Shanghai International Energy Exchange after climbing 2.4% on Monday.