Russia Ponders Oil Cuts
February 10, 2020
Baker Hughes reported the US energy firms increased the number of oil rigs for the third time in four weeks. The US oil drillers added 1 oilrigs , bringing the total number of rigs to 676.
The OPEC+ meeting that was supposed to be moved up is now in question. Russia’s Energy Minister, Alexander Novak, said Russia needed more time to decide whether to join and additional oil output cut by OPEC, saying US crude production growth would slow and global demand remained solid. He estimates global oil demand may fall by 150,000 to 200,000 bpd this year due to the coronavirus outbreak and other negative events.
JPMorgan cut its estimates for the price of Brent crude oil to averge$60.40 per barrel in 2020, down $4.10 per barrel from its previous forecast.
PertoChina, China’s second-biggest start refiner, plans to reduce its crude oil throughput by 320,000 bpd this month versus its original plan as the Wuhan virus hits fuel demand, according to Reuters. This cut is about 10% of the refiner’s average production rate of around 3.32 million bpd. This cut brings total production cutbacks by state refiners, including Sinopec Corp and China National Offshore Oil Company to around 940,000 bpd.
US Energy Secretary, Dan Brouillette, said that the impact of the coronavirus on global energy markets is currently marginal, though it could worsen if the virus spreads.
Eurasia Group estimated a contraction in oil demand in China of as much as 3 million bpd in the first quarter from 2019 levels.
The World Health Organization (WHO) said the world is facing a chronic shortage of gowns, masks, gloves and other protective equipment in the fight against a spreading coronavirus epidemic. World Health Organization chief, Tedros Adhanom Ghebreyesus, said the UN agency has been sending testing kits, masks, gloves, respirators and gowns to every region. There are now 31,211 confirmed coronavirus cases in China and 637 deaths, as well as, 270 cases in 24 other countries with 1 death.
Non-farm payrolls came in at up 225,000 against expectations of just 158,000. This was a good reading and positive for the markets.
Market is still under some selling pressure here in early markets.