By Adedapo Adesanya
Prices of crude oil lost earlier gains on Tuesday despite considerations of the Organisation of the Petroleum Exporting Countries (OPEC) of exploring options of how best to deal with the potential impact on the commodity by the spread of coronavirus, which has killed more than 490 people and caused oil prices to slide.
Prices of the US West Texas Intermediate (WTI) has fallen below $50 per barrel for the first time in more than a year, as demand worries continue to affect the market. Last night, the price fell by 43 cents or 0.86 percent to $49.68 per barrel. On its part, the Brent Crude went down by 37 cents or 0.75 percent to trade at $54.08 per barrel.
The OPEC and non-OPEC’s Joint Technical Committee (JTC) scheduled a meeting for February 4-5 in Vienna, the Austrian capital, to assess the impact of China’s new coronavirus on oil demand, but this was, however, not enough to lift the market which succumbed to the bears.
The technical panel is likely to make a recommendation on whether to extend current oil supply curbs beyond March or to implement deeper output cuts.
Expectations show that the cartel may suggest an even larger production cut between 500,000 barrels to 1 million barrels a day as officials are set to issue recommendations this week, with a final decision to come after a meeting of OPEC and its allies, during the February 14-15 meeting.
This will be crucial because OPEC’s oil output fell in January to the lowest since 2009 after several members led by Saudi Arabia over-delivered on a new agreement to cut production.
As at December 2019, the producers agreed to 1.7 million barrels and with a minimum of 500,000 extra cuts now recommended again, this will see more than 2 million barrels not produced by the members of the organisation.
Looking ahead, investors await inventory weekly data from the American Petroleum Institute (API), which could help influence crude trading ahead of the more closely watched Energy Information Administration (EIA) data later on Wednesday.
The EIA is expected to report that crude inventories rose by 3 million barrels to 434.7 million barrels, for the week ended January 31 according to analysts polled by S&P Global Platts.
This will likely worsen conditions for the market that has been faced with opposition caused by rising supply of the commodity.
