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Oil surges as Opec and allies set urgent meeting for Monday – The Straits Times

Oil surges as Opec and allies set urgent meeting for Monday  The Straits Times

LONDON • Oil moved back above US$31 a barrel in London yesterday, reversing earlier declines, as Opec+ scheduled an urgent meeting for next week after a historic slump in prices that has crippled the energy sector.

The coalition will hold a meeting by video conference on Monday, though it is still not clear who will attend, according to delegates. News of the plan came just hours after US President Donald Trump said he expected global producers including Saudi Arabia and Russia to cut more than 10 million barrels of production, triggering the biggest ever jump in prices on Thursday.

Futures had been trading lower earlier yesterday, on growing doubts over Mr Trump’s claim, with Citigroup and Goldman Sachs Group saying any supply deal would be too little, too late as demand craters due to the coronavirus.

But the market is interpreting next week’s meeting as a step closer to some sort of deal that could help address the collapse in prices.

Brent for June settlement climbed US$1.54, or 5.1 per cent, to US$31.48 a barrel on the ICE Futures Europe exchange as of 8:43am in London after falling as much as 5.6 per cent earlier. West Texas Intermediate for May delivery rose 0.8 per cent to US$25.52 on the New York Mercantile Exchange after declining as much as 7.1 per cent earlier.

The virtual meeting will be open to all producers, not just those that are part of the Opec+ alliance, according to the delegates. Opec+ is a group of 24 oil-producing nations, made up of the 14 members of the Organisation of Petroleum Exporting Countries, and 10 non-Opec members, including Russia.

While Mr Trump tweeted on Thursday that he had spoken to Saudi Crown Prince Mohammed bin Salman, who had in turn spoken with Russian President Vladimir Putin, a person familiar with the situation said the US President’s goal is purely aspirational and will hinge on whether Riyadh and Moscow can reach a deal.

“Even if there is an agreement to curtail 10 million barrels a day of output, the fundamentals show demand destruction and inventory builds,” said Mr John Driscoll, chief strategist for JTD Energy Services in Singapore. The “anxiety and mayhem out there is reminiscent of the financial crisis”.

The outlook for the physical market remains bleak as discounts for some grades of physically delivered oil across the United States and Canada widened. Heavy Louisiana Sweet crude lost US$1.75 a barrel relative to West Texas Intermediate to a record US$10.50 discount.

Texas Railroad Commissioner Ryan Sitton, in a rare move for the state’s oil regulator, tweeted on Thursday that he spoke with Russian Energy Minister Alexander Novak and discussed a 10-million barrel a day global output cut, and would also talk to the Saudi Oil Minister soon.

BLOOMBERG, REUTERS

Source: straitstimes.com

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