Oil rises $1 as OPEC, allies work on big output cut

Brent oil prices rose on Wednesday on expectations that major producers have moved closer to an agreement to enact deeper output cuts aimed at offsetting the slump in demand caused by the coronavirus outbreak.

Brent crude was up by $1.11, or 2.1%, at $52.97 a barrel at 1234 GMT.

U.S. West Texas Intermediate (WTI) was up by 93 cents, or 2%, at $48.11 a barrel.

Saudi Arabia and other OPEC members are seeking to persuade Russia on Wednesday to join them in large additional oil output cuts to prop up prices which have tumbled because of the coronavirus outbreak.

“With demand-side uncertainties having already dragged Brent futures about 19 percent lower since the start of the year … oil’s upside appears significantly capped amid persistent concerns over the coronavirus outbreak,” said Han Tan, market analyst at FXTM.

A technical panel of several representatives from OPEC states, Russia and other producers recommended on Tuesday cutting output by between 0.6-1.0 million barrels per day (bpd) during the second quarter only.

Iran’s oil minister Bijan Zanganeh said the market was facing a surplus.

“There is no doubt that there is an imbalance in the supply and demand of oil. Right now, the supply in the market is greater than demand,” Zanganeh said. “It’s necessary for OPEC and non-OPEC to make all their efforts to balance the market.”

Goldman Sachs again cut its Brent price forecast, to $45 a barrel in April, while expecting Brent gradually recovering to $60 a barrel by the year-end.

The bank said while an output cut by OPEC “will help normalize oil demand and inventories later this year, they can’t prevent an already started large oil inventory accumulation.”

Morgan Stanley also cut its second-quarter 2020 Brent price fo