By Adedapo Adesanya
Oil prices slipped on Thursday, March 5, as the market reacted negatively to a larger production cut of 1.5 million barrels per day at the second round of meetings of the Organisation of the Petroleum Exporting Countries (OPEC) in Vienna, Austria.
The deal is, however, in the hands of non-OPEC allies leader, Russia, which left the Wednesday meeting of Joint Committee members without agreeing to further cuts.
This affected the price of Brent crude oil, which dropped 92 cents or 1.8 percent to trade down at $50.21 per barrel. As for the US benchmark, West Texas Intermediate (WTI) crude, it recorded a drop of 61 cents equivalent to 1.30 percent to sell $46.17 per barrel as at last night.
The cartel revealed plans at Thursday’s meeting of only OPEC members to reduce output among its members by one million barrels per day, and said it would seek an additional 500,000 barrels per day in cuts from its longstanding allies, including Russia.
Russia’s Finance Minister, Mr Anton Siluanov, said Moscow was prepared for a drop in oil prices should OPEC+ fail to reach a deal.
Today, the country’s Energy Minister, Mr Alexander Novak, is expected back at the negotiating table with all members of the alliance to discuss the proposal being pushed by OPEC to non-OPEC states, including Russia, to cut production by one-third, 500,000 barrels per day of 1.5 million barrels per day. Alrreadly, there are speculations that this proposal may not scale through.
Saudi Arabia has been pushing OPEC and its allies, a grouping known as OPEC+, for a big cut up to 1.5 million barrels per day for the second quarter of this year, while extending existing cuts to over two million barrels per day, which expire this month, to the end of 2020.
The proposed OPEC cut, if approved, would remove an extra 1.5 million barrels per day from the market, it would bring the group’s overall output reduction to 3.6 million barrels per day or about 3.6 percent of global supplies.
Prices were supported earlier on Thursday session as monitored by Business Post as a result of lower-than-expected rise in crude oil inventories in the United States.
According to the Energy Information Administration (EIA), crude inventories rose last, week less than analysts had expected. It also put a peg on concerns of continuous oversupply in the markets.
However, concerns over demand growth remained because of the coronavirus outbreak which has spread to 79 countries in less than three months and killed more than 3,000 people and almost 95,000 people infected globally.
Dipo Olowookere