Oil prices rose on Friday after Russia said it backs a recommendation for the OPEC and its producer allies to deepen output cuts amid contracting demand for crude as China battles the coronavirus epidemic that has hit global markets.
Brent crude LCOc1 futures rose 32 cents, or 0.6 per cent, to $55.25 a barrel by 0104, after falling 0.6 per cent on Thursday. U.S. West Texas Intermediate (WTI) crude CLc1 futures were up 26 cents, or 0.5 per cent, at $51.21 a barrel, having gained 0.4 per cent the previous session. A panel advising the Organization of Petroleum Exporting Countries (OPEC) and allies led by Russia, known as the OPEC+ group, suggested provisionally cutting output by 600,000 barrels per day (bpd), three sources told Reuters on Thursday.
"We support this idea," said Sergei Lavrov, Russia's Foreign Minister, when asked about the proposal at a news conference in Mexico City later in the day. Oil prices have fallen by more than a fifth since the outbreak of the virus in the city of Wuhan in China. Chinese President Xi Jinping declared a "people's war" on the epidemic as China's Hubei province, where Wuhan is located, reported 69 new deaths, taking the total in the country to more than 600.
"The impact of the coronavirus on the oil market remains largely a Chinese demand story with weakening jet fuel demand and economic run cuts, but demand destruction outside of China has been minimal, for now," RBC Capital Markets analysts said in a note.