- Saudi Energy Minister, Prince Abdulaziz bin Salman, said that all options are open at an OPEC meeting in early March.
- OPEC agreed in December to increase its supply cuts by 500,000 BPD to 1.7 million BPD until the end of March.
- Oil is heading for a significant decline in the week, in light of concerns about the possibility of a new Coronavirus spread in China.
OPEC is considering extending its oil production cuts until the end of the year, as the markets are still looking downward, but discussions remain at an early stage. Russia’s TASS news agency quoted a source within the organization on Friday. The source said the group, which includes two oil exporters, was due to meet in March, but it might also meet in June to decide on the policy.
On Thursday evening, the news sources reported that Saudi Energy Minister, Prince Abdulaziz bin Salman, said that all options are open at an OPEC meeting in early March, including additional cuts to oil production. He added that it was too early to make a decision on the need for additional discounts. He said that when the Organization of Petroleum Exporting Countries (OPEC) and its allies, led by Russia, meet at an emergency meeting in March, the group will study the market situation and “consider objectively” whether additional cuts are needed.
OPEC agreed in December to increase its supply cuts by 500,000 BPD to 1.7 million BPD until the end of March. Prince Abdulaziz bin Salman said that the objective of OPEC is to reduce the number of excess stocks, which are due to seasonal reasons and occur in the first half of the year. OPEC is scheduled to meet in Vienna on March 5th and 6th to define its policy. A ministerial monitoring committee for the agreement will meet in Vienna on March 4.
Meanwhile, the Belarusian news agency, BTA, quoted Belarus President Alexander Lukashenko as saying on Friday that his country was searching for alternatives to Russian oil, and was in discussions with the United States, Saudi Arabia, and the United Arab Emirates. Oil supplies from Russia to Belarus stopped suddenly on January 1, as companies including Rosneft, Gazprom Oil, Lukoil, and Surgut suspended gas deliveries. Moscow and Minsk are discussing the terms of their contract regarding oil supply.
In the markets, oil prices fluctuated on Friday, after rising in the morning due to the drop in US crude stocks. However, it is heading for a significant decline in the week, in light of concerns about the possibility of a new Coronavirus spread in China, that has claimed 41 lives so far. This may curb travel and demand for fuel and prospects. By 13:14 GMT, Brent crude futures fell 22 cents, or 0.35 percent, to $61.82 a barrel, after dropping 1.9 percent in the previous session. In the week, Brent declined about four percent.
“Oil is range-bound. If prices dip below $50 a barrel OPEC will cut more; if it goes above $55 the US will produce more,” said Jeffrey Haley, market analyst at Oanda. “The market is caught in this middle range. It’s difficult to forecast the news that will eventually see a break-out.”
Prices were slightly supported in the morning by the news of a drop in crude oil inventories and distillate products in the United States last week, according to the US Energy Information Administration. Although the decline in stocks did not match the expectations of analysts in a Reuters poll of a decrease of one million barrels, oil inventories fell by 405 thousand barrels in the week ending January 17, according to government data.