OPEC postponses technical meetings to evaluate Omicron impact: sources

LONDON - OPEC and its allies have postponed technical meetings to later this week, giving themselves more time to assess the impact of the new Omicron coronavirus variant on oil demand and prices, according to OPEC+ sources and documents.

Oil prices crashed together with other financial markets on Friday by more than 10 percent, their largest one-day drop since April 2020, as the new variant spooked investors and added to concerns that a supply surplus could swell in the first quarter.

Friday's fall was exacerbated by low liquidity due to a US public holiday.

Before Friday, OPEC had already predicted the surplus would grow steeply after the United States and other major consumers decided to released oil stocks to help cool down prices.

OPEC and allies known as OPEC+ have move their joint technical committee to Wednesday from Monday, according to the documents. OPEC would hold a meeting the same day.

A joint ministerial monitoring committee will meet on Thursday instead of Tuesday, the documents showed, OPEC+ will also meet the same day, when a policy decision will likely be announced.

"We need more time to understand what this new variant is and if we need to overreact or not," one OPEC+ source said.

OPEC+ has been releasing 400,000 barrels per day of oil per month while winding down its record cuts from last year, when it cut production by as much as 10 million bpd to address lower demand caused by the virus lockdowns.

OPEC+ has some 3.8 million bpd of cuts still in place and some analysts have suggested the group could pause with the increases after the release of stocks and possible repercussions for demand from new lockdowns to contain the new variant.

-reuters- 

Saudi, Russia reach deal on oil cuts, raising pressure for compliance

DUBAI/MOSCOW - OPEC leader Saudi Arabia and non-OPEC Russia have agreed a preliminary deal to extend existing record oil output cuts by one month while raising pressure on countries with poor compliance to deepen their cuts, OPEC+ sources told Reuters.

OPEC+ agreed to cut output by a record 9.7 million barrels per day, or about 10% of global output, in May and June to lift prices battered by plunging demand linked to lockdown measures aimed at stopping the spread of the coronavirus.

Rather than easing output cuts in July, OPEC and its allies, a group known as OPEC+, were discussing keeping those cuts beyond June.

"Saudi Arabia and Russia are aligned on the extension for one month," one OPEC source said.

"Any agreement on extending the cuts is conditional on countries who have not fully complied in May deepening their cuts in upcoming months to offset their overproduction," the source said.

The group also considered holding an online meeting on June 4 to discuss output policy, after Algeria, which holds the presidency of the Organization of the Petroleum Exporting Countries, proposed bringing forward a meeting planned for June 9-10.

The OPEC source said that an earlier meeting on June 4 is also conditional on compliance and that the discussions now are about implementing criteria for those countries who have not fully complied with the oil cuts and how they can compensate for their overproduction in the coming months.

OPEC members Iraq and Nigeria has shown weak compliance with its output reduction targets in May. OPEC/O

Kazakhstan also failed to fully meet its obligations under the OPEC+ oil cut pact, sources said.

Two sources also told Reuters that Gulf OPEC producers Saudi Arabia, Kuwait and the United Arab Emirates are not discussing extending their deeper voluntary oil cuts of 1.180 million bpd beyond June.

Oil prices rose in recent days from the lows of April buoyed by a continuing recovery in China, the epicenter of the coronavirus outbreak, while other economies are slowly opening up after lockdowns to contain its spread.

"Overall the market is moving in the right direction with the gradual easing of the lockdown. But we still need to be cautious. There is always a risk of another wave of the coronavirus," the first OPEC source said.

"The other thing is how quickly will demand patterns recover. Inventories are still above average levels and that needs to be tackled." (Reporting by Rania El Gamal and Olesya Astakhova, editing by Louise Heavens and David Evans)

-reuters-

Saudi foreign reserves fall at fastest for two decades

RIYADH/DUBAI - Saudi Arabia's central bank foreign reserves fell in March at their fastest rate in at least 20 years and to their lowest since 2011, while the kingdom slipped into a $9 billion budget deficit in the first quarter as oil revenues collapsed.

The world's largest oil exporter is suffering from historic price lows, while at the same time measures to fight the new coronavirus are likely to curb the pace and scale of economic reforms launched by Crown Prince Mohammed bin Salman.

The Saudi Arabian Monetary Authority said late on Tuesday its net foreign assets, which include securities such as U.S Treasuries and foreign deposits, fell in March to $464 billion, their lowest in 19 years.

The nearly $27 billion decline - the biggest monthly drop in at least two decades - signals the kingdom's urgent need to tap into reserves to offset economic damage from oil prices and a severe coronavirus-driven slowdown of non-oil sectors.

"We believe that the magnitude of the drop ... reflected both higher government funding to cover the budget deficit and the support packages announced in March to help counterbalance the impact of COVID-19," said Monica Malik, chief economist at Abu Dhabi Commercial Bank (ADCB).

Finance Minister Mohammed al-Jadaan said last week the kingdom would limit its drawdown to a maximum of $32 billion from reserves this year to fill a widening deficit which it plans to cover instead by increasing borrowing to nearly $60 billion.

Early on Wednesday, the finance ministry reported a first quarter budget deficit of $9 billion, mostly because of a drop in oil revenues that reversed a first quarter surplus of around $7.4 billion in 2019.

Oil revenues in the first three months of the year posted a 24% annual decline to $34 billion and pushed total revenues down 22% year on year.

Saudi Arabia, which had registered more than 20,000 coronavirus cases as of Tuesday with 152 deaths, had originally projected a $50 billion deficit this year, or 6.4% of gross domestic product (GDP), widening from around $35 billion last year.

Jadaan has said the deficit could now widen to up to 9% of GDP this year, but some analysts have predicted 22% with oil prices at $30 a barrel.

PRICE PLUNGE

International oil prices have shed around two thirds value since the start of this year and are trading around $21.

"If Finance Minister al-Jadaan's plans are for merely $32 billion of reserves drawdown then, following a $27 billion reduction in March alone, that means almost all the remainder will be covered by new sovereign debt issuance, assuming there are no further privatisations, because of market conditions," said Hasnain Malik, head of equity strategy at Tellimer.

Saudi Arabia and other large producers recently agreed to cut output by almost 10 million barrels per day (bpd), in May-June, in an attempt to balance the market, but demand kept falling nonetheless due to the global slowdown.

Jadaan said last week he expects the pandemic to cause a slump in activity in the non-oil private sector too this year and that the government could take more actions on top of $32 billion in emergency stimulus measures announced last month.

Private sector loan growth, however, was solid in March, central bank data showed, "potentially reflecting the higher borrowing requirements of corporates with COVID-19 impacting cash flows," said ADCB's Malik.

Non-oil revenues in the first quarter fell 17% compared to the same period one year earlier, with revenues from taxes on goods and services plunging, in a sign of overall slowdown.

Saudi Arabia has already cut its 2020 budget by nearly 5% and further spending curbs are likely.

In Q1, however, capex spending declined only 4%, the finance ministry said.

Riyadh last month raised its debt ceiling to 50% of GDP from 30%. It has already borrowed $12 billion in international bonds this year.

($1 = 3.7600 riyals) (Reporting By Marwa Rashad and Davide Barbuscia; Additional reporting by Ahmed Tolba; Editing by Himani Sarkar, Shri Navaratnam, Barbara Lewis and Andrew Cawthorne)

-reuters-

Oil plunges again as virus ravages energy markets

SINGAPORE - Brent crude plunged more than 12 percent to below $17 a barrel Wednesday while US oil erased early gains and fell, as the coronavirus strangles demand and ravages energy markets, while storage facilities approach full capacity. 

In another day of volatile trading, US benchmark WTI surged in early Asian deals while Brent also edged up on news that top producers had held talks -- only for prices to suddenly change course.

Brent dropped 12.31 percent to $16.98 a barrel, extending heavy losses from a day earlier. 

WTI for June delivery, which had rebounded about 20 percent at the open, was down around five percent at $11 a barrel in the afternoon.

On Monday, WTI for May delivery collapsed to an unprecedented low of minus $40.32 as traders scrambled to sell it before the contract expired Tuesday, but could find few buyers with storage capacity fast filling up. 

The negative prices meant that traders were forced to pay to have the crude taken off their hands.

Analysts said the morning bounce was driven by news that members of exporting group OPEC, as well as some allies in the OPEC+ grouping, held a teleconference Tuesday -- but grim reality soon returned to the markets. 

Prices have plunged as lockdowns and travel restrictions introduced worldwide to stem the spread of the virus hammer demand, and observers believe there is little way out for oil except bringing an end to the pandemic. 

"The overtly bearish sentiment may well keep prices suppressed in the near-term until we find the light at the end of the tunnel with progressive resumption of halted economic activities across the globe," said Jingyi Pan, a market strategist with IG.

US crude has been particularly hard-hit because of storage problems, as WTI is delivered at a single, inland point, although the sell-off has now spread to Brent. 

The crisis was worsened by a price war between Saudi Arabia and Russia. They drew a line under the dispute earlier this month and, along with other top producers, agreed to slash output by almost 10 million barrels a day to shore up virus-hit markets. 

But that has had little effect, with prices continuing to plummet, as analysts predict it will not make up for the massive hit to demand. 

Agence France-Presse

Saudi says total oil curbs could reach 19.5 million barrels

RIYADH - Oil output cuts by OPEC and its allies, together with pledges from other G20 nations and purchases by strategic reserves, could remove 19.5 million barrels per day from the market, the Saudi energy minister said.

US President Donald Trump said Monday that the actual output cuts may be deeper than the headline figure of 9.7 million bpd -- with top producers considering slashing output by 20 million barrels a day under the deal.

"People are saying 10 million but we think the number they will actually hit is going to be closer to 20 million barrels a day," Trump said at a press briefing. 

He did not give details, but the figures chime with the Saudi breakdown.

The OPEC+ alliance, led by Riyadh and Moscow, agreed on Sunday to slash daily production by 9.7 million bpd over the next two months to arrest a slump triggered by the coronavirus shutdown and a price war between Saudi Arabia and Russia.

Saudi media on Tuesday quoted Energy Minister Prince Abdulaziz bin Salman as saying that G20 producers outside OPEC+ have pledged to cut 3.7 million bpd.

He also estimated purchases for countries' strategic petroleum reserves for use in emergencies at 200 million barrels over May and June, boosting the total impact to 19.5 million bpd.

Prince Abdulaziz said the kingdom could cut below its quota of 8.5 million bpd if necessary.

According to the deal, Saudi Arabia and Russia will cut 2.5 million bpd each from their production of 11 million bpd in October 2018.

But the minister was quoted by Energy Intelligence as saying that Riyadh will effectively be cutting 3.8 million bpd from current record-high output levels of 12.3 million bpd which were boosted during the price war.

Other Gulf states will be also cutting from recently increased output levels, he said.

"So, in reality, what OPEC+ will be doing effective May 1 will be a total of 12.5 million bpd," the minister said. 

The spread of the coronavirus has hit oil demand hard, with experts estimating that one-third of global demand -- which stood at 100 million bpd before the disease -- is being wiped out.

"We have to watch what is happening with demand destruction and demand improvement, depending on how things evolve," the minister said.

Agence France-Presse

Oil, equities slip as OPEC+ cut fails to lift confidence

TOKYO -- Oil prices and US stock futures dipped in early Monday trade as a landmark agreement by OPEC and its allies to slash output by a record amount failed to give investors any cause for lasting optimism about the economic outlook.

US S&P 500 mini futures dropped 1.54 percent, erasing a brief gain to a one-month high made right after the start of trading.

Nikkei futures traded in Chicago suggest Tokyo's benchmark is likely to slip about 0.2 percent.

US crude futures dropped to $22.67 per barrel, down 0.4 percent as they quickly erased earlier gains to hit the lowest level since April 2.

Brent futures were down 0.67 percent at $31.27 per barrel, having risen to $33.99.

A group of oil producing countries known as OPEC+, which includes Russia, said it had agreed to reduce output by 9.7 million barrels per day (bpd) for May-June, after four days of marathon talks.

A bigger question for investors, however, is whether the novel coronavirus pandemic, which has ravaged global economic growth, will soon peak in the United States and Europe, as had been hoped.

"While panic selling we saw last month has faded, not many investors would want to chase stock prices higher given we are about to see more evidence of economic downturns," said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui DS Asset Management.

OPEC+ said in a draft statement seen by Reuters it expected total global oil cuts to amount to more than 20 million bpd, or 20 percent of global supply, effective May 1.

That includes contributions from non-members, steeper voluntary cuts by some OPEC+ members and strategic purchases by the world's largest consumers, sources said.

Still, that falls short of completely offsetting an estimated 30 million bpd drop in worldwide fuel consumption caused by the COVID-19 pandemic.

"In the short term, the WTI may hold above $20 after the deal but it could fall below that level unless all the countries follow up their words with actions," said Tatsufumi Okoshi, senior economist at Nomura Securities.

Also in focus this week, US companies announce their earnings, starting from big banks, and China releases its trade data on Tuesday and closely watched gross domestic product data on Friday.

In foreign exchange markets, risk-sensitive currencies were softer while the safe-haven dollar and the yen found support.

The Australian dollar fell 0.3 percent to $0.6303 while the Mexican peso dropped 0.4 percent to 23.430 per dollar.

The euro stood flat at $1.0934 and the yen gained 0.15 percent to 108.34 to the dollar.

-reuters-

OPEC, Russia meet again to approve biggest ever oil cut

BAKU/DUBAI/LONDON - OPEC, Russia and other oil producing nations were meeting on Sunday in a bid to clinch a deal on the biggest oil cut ever, amounting to 10 percent of global supply, after their initial efforts to support oil prices amid the coronavirus pandemic were blocked by Mexico.

The group, known as OPEC+, was expected to start a video conference at 1600 GMT.

On Thursday, OPEC+ outlined plans to cut output by more than a fifth, or by 10 million barrels per day (bpd), but Mexico balked at the production cuts it was asked to make, delaying the signing of a final deal.

"The ministerial meeting between OPEC and non-OPEC members is a follow-up after the April 9 meeting," the energy ministry of OPEC+ member Azerbaijan said on Sunday.

Measures to curb the spread of the coronavirus have destroyed demand for fuel and driven down oil prices, straining budgets of oil producers and hammering the U.S. shale industry, which is more vulnerable to low prices due to its higher costs.

OPEC+ also said it wanted producers outside the group, such as the United States, Canada, Brazil and Norway, to cut a further 5% or 5 million bpd.

Canada and Norway signalled willingness to cut and the United States, where legislation makes it hard to act in tandem with cartels such as OPEC, has said its output would fall steeply by itself this year due to low prices.

Mexico President Andres Manuel Lopez Obrador said on Friday that U.S. President Donald Trump had offered to make extra U.S. cuts on his behalf, an unusual offer by a Trump who has long railed against OPEC.

Trump, who had threatened Saudi Arabia with oil tariffs if it did not fix the market's oversupply problem, said Washington would help Mexico by picking up "some of the slack" and being reimbursed later.

He did not say how this would work and OPEC leader Saudi Arabia has so far refused to accept the fix, according to OPEC sources.

Global oil demand is estimated to have fallen by a third as more than 3 billion people are locked down in their homes due to the coronavirus outbreak.

A 15 percent cut in supply might not be enough to arrest the price decline, banks Goldman Sachs and UBS predicted last week, saying Brent prices would fall back to $20 per barrel from $32 at the moment and $70 at the start of the year.

(Reporting by Reuters OPEC Team, Nailia Bagirova in BAKU, Katya Golubkova in MOSCOW and Tamara Vaal in NUR-SULTAN; Writing by Andrey Ostroukh and Dmitry Zhdannikov; Editing by Jason Neely, Alsion Williams and Alex Richardson)

-reuters-

Oil crash piles pressure on virus-hit Saudi economy

RIYADH - From empty hotels to shuttered beauty salons, oil-dependent Saudi Arabia is bracing for a coronavirus-led economic slump on top of possible austerity measures as crude prices go into free fall.

Huge losses are expected after the Arab world's biggest economy shut down cinemas, malls and restaurants, halted flights, suspended the year-round umrah pilgrimage and locked down eastern Qatif region -- home to around 500,000 -- in a bid to contain the deadly virus.

The top crude exporter also faces plummeting oil prices, which slipped below $30 a barrel this week for the first time in four years, on the back of sagging demand and a price war with Russia.

The shock of this liquidity sapping cocktail of events has necessitated austerity measures which are likely to imperil grandiose diversification projects.

Adding to the chain of events are the recent arrests of King Salman's brother and nephew, which triggered speculation of political instability amid the government's public silence on the royal purge.

"It's crisis time," said a Saudi government employee, explaining why he had begun converting part of his salary into US dollars and gold coins.

"Everything is unpredictable and we should be ready for the worst."

The central bank has shrugged off fears that plunging oil prices were straining the kingdom's currency, pegged for decades to the US dollar.

A jeweller in Riyadh told AFP he had fielded a number of enquiries to convert "substantial amounts of cash" into gold bars and coins.

SPENDING CUTS

Many government workers fear cuts to state allowances are coming despite rising living costs.

Some Saudis also worry that recruitment in the public and private sectors will freeze, just as unemployment was already high. 

Meanwhile, Saudi students are worried that government scholarships for overseas education will take a hit.

The finance ministry has instructed government bodies to submit proposals to slash this year's spending by 20 to 30 percent, the economic consultancy Nasser Saidi and Associates said in a research note.

"This will likely take the shape of postponed projects and delays in awarding contracts" among other economizing measures, the note said.

The kingdom is now preparing budget scenarios in which crude prices could drop as low as $12 to $20 per barrel, according to the Energy Intelligence Group.

"Public confidence depends on government spending and oil sentiment -— both are down," said a consultant advising a Saudi ministry on a major project.

"We don't know if we will have our jobs tomorrow."

The once free-spending OPEC kingpin has instructed Saudi ministries that they need to account for "every penny" they spend, the consultant added.

Saudi authorities did not respond to requests for comment.

Several Riyadh hotels —- many of them empty amid falling tourist numbers —- have been forced to send their staff on unpaid leave.

But providing some support, the health ministry has booked multiple Riyadh hotels to quarantine people after the coronavirus scare, according to several staff and guests who were forced to empty the properties at short notice.

'SURVIVAL OF FITTEST'

The oil crash follows the crude exporter's decision to hike production from April and offer the biggest price cuts in two decades, in retaliation for Russia's refusal to tighten supply as the virus saps demand.

Saudi Arabia has shrugged off criticism that the move could bankrupt its oil-producing rivals, indicating it was no longer willing to play the role of "swing producer" that bears the burden of stabilizing the markets.

"The days of Saudi Arabia absorbing oil market shocks on behalf of the global economy and other producers are probably over," said Saudi expert and author Ali Shihabi. 

"The energy game... is now a survival of the fittest."

The deep-pocketed kingdom, with fiscal reserves of around $500 billion, has reiterated it is an ultra low-cost producer of crude and can withstand low prices for years.

But Riyadh has posted a budget deficit every year since the last oil price rout in 2014. It has borrowed over $100 billion and drawn from its reserves to plug the deficit.

Crown Prince Mohammed bin Salman's multi-billion dollar projects to wean the economy away from oil remain vulnerable, and Saudi Arabia needs a crude price of about $80 a barrel to balance its budget.

As economic challenges rise, the detention of royal princes Ahmed bin Abdulaziz al-Saud and Mohammed bin Nayef has fueled fears of instability.

One source close to the royal court dismissed such concerns and said the detentions were meant to send a stern warning within the royal family not to oppose the crown prince.

Yet "the threat to Prince Mohammed isn't coming from his royal rivals," said Kristin Diwan of the Arab Gulf States Institute in Washington.

"It's from the collapse of oil revenues and with them his ambitious economic plans."

source: news.abs-cbn.com

OPEC recommends drastic output cut to counter coronavirus

VIENNA -- Ministers from the OPEC cartel of oil-producing countries on Thursday recommended a drastic production cut of 1.5 million barrels per day to their allies to counter a slump in demand caused by the coronavirus outbreak.

However, it remains to be seen whether the OPEC+ states -- Russia in particular -- will be prepared to countenance such a large cut when they join the meeting of the Organization of Petroleum Exporting Countries on Friday.

OPEC nations -- led by the world's third-largest oil producer Saudi Arabia -- agreed Thursday to recommend "a further adjustment of 1.5 million barrels per day until 30 June 2020," a statement issued by the Vienna-based bloc said.

Countries in the OPEC+ grouping of the cartel's allies would be asked to take on 500,000 barrels of the cuts, the statement added.

Producers had already had to contend with abundant supplies weighing on prices -- agreeing to 500,000-barrels-per-day production cuts at their last meeting in December -- but the spread of COVID-19 across the world has sent prices plunging.

The European benchmark, Brent crude, sank to under $50 per barrel on Sunday, a level not breached since July 2017.

'MIGHT NOT BE ENOUGH'

The success of the summit will above all hang on the alliance between Saudi Arabia and Russia, the most important players in the OPEC and OPEC+ groupings respectively.

Russian President Vladimir Putin was quoted on Sunday as saying the current market price was "acceptable" and above the level foreseen in Russian economic planning.

Russia's RIA Novosti agency reported Wednesday that Moscow's delegation was proposing an extension of the existing deal with no fresh cuts.

Ann-Louise Hittle, an analyst with Macro Oils, said she expected that Russia, world's number 2 producer after the United States, to agree with the cut "given their history of co-operation with OPEC".

Tamas Varga of PVM told AFP that even the recommended extra cuts "might not be enough", saying OPEC's new forecasts for a drop in global oil demand growth may turn out to be "overoptimistic".

"I believe that oil prices will fail to recover significantly for the remainder of the year as the coronavirus crisis drags on," he said.

Some economists believe it is not impossible that the world economy could contract in the first quarter of the year, which implies lower demand for oil than OPEC has been forecasting, although activity is expected to bounce back once the crisis fades.

Oil prices drifted lower after the announcement.

'FOOTSHAKE'

Aside from bridging their differences on the effect of the virus on the market, the assembled officials are also having to accommodate changes to their routines in Vienna.

All those entering the OPEC headquarters have to undergo temperature checks.

After the meeting's opening speech, a medical adviser passed on hygiene guidelines, while assuring delegates that the risk of coronavirus infection in Vienna was "very, very low".

Austria nationwide has recorded more than 40 cases so far.

On Wednesday, OPEC's Secretary General Mohammed Barkindo and Russian Energy Minister Alexander Novak were seen in a video tweeted by the organisation attempting a "footshake", gently bumping the sides of their feet together in a more hygienic alternative to a handshake.

The cartel has also barred access to its headquarters for the media due to the "risk that would come from convening such a vast number of people in one place".

Livestreams of the beginning of meetings are instead being made available to journalists at a press center in a nearby hotel.

In a statement on Tuesday, OPEC said it was following UN guidelines and planned to "shorten the format of such gatherings, limit the number of participants and cancel any related side-events".

Agence France-Presse

OPEC divided on how to combat coronavirus fallout

VIENNA - Ministers from the OPEC group of oil-producing countries will meet in Vienna Thursday to try to overcome their divisions on how to react to the fall in oil prices in the wake of the novel coronavirus epidemic.

The group already had to contend with abundant supply on global markets weighing on prices but the spread of COVID-19 across the world has sent them plunging.

The European benchmark of Brent sank to under 50 dollars on Sunday, a level not reached since July 2017.

The effects of the virus on global demand -- particularly in worst-hit China -- has blown a hole through the group's attempt to support prices at its last meeting in December by agreeing on production cuts.

The only option for OPEC -- and its allies in the OPEC+ grouping who will be joining meetings on Friday -- would appear to be another round of production cuts.

The success of the summit, which has been called 3 months ahead of the next scheduled meeting, will above all hang on the alliance between Russia and Saudi Arabia, the world's second and third-biggest producers and the most important players in the OPEC and OPEC+ groupings respectively.

"Their objective will be to overcome their differences of opinion so as to be able to speak with one voice from tomorrow," said Carsten Fritsch, analyst at Commerzbank.

DIVISIONS LAID BARE

The splits on the way forward even within OPEC were on display on Wednesday as delegations arrived.

The chairman of Libya's National Oil Corporation Mustafa Sanallah said he was wary of any additional cuts.

"I think there's no need to reduce," Sanallah told AFP, adding: "I think the price is good right now."

However Iran's Oil Minister Bijan Namdar Zanganeh said a cut of "at least... around half a million barrels" was necessary to stabilize the market.

Saudi Arabia is also a supporter of further cuts, with Riyadh even thought to be amenable to a cut in the order of a million barrels per day.

But Russia may be harder to convince on this score, with Russian President Vladimir Putin being quoted on Sunday as saying the current market price was "acceptable" and above the level foreseen in Russian economic planning.

Russia's RIA Novosti agency reported Wednesday that Moscow's delegation was proposing an extension of the existing deal with no fresh cuts.

FOOTSHAKE

Aside from bridging their differences on the effect of the virus on the market, the assembled diplomats are also having to accommodate changes to their routines in Vienna.

Two medical workers were on hand to screen the temperatures of all those entering OPEC headquarters on Wednesday.

OPEC's Secretary General Mohammed Barkindo and Russian Energy Minister Alexander Novak were seen in a video tweeted by the organization attempting a "footshake", gently bumping the sides of their feet together in a more hygienic alternative to a handshake.

The cartel has also taken the extraordinary step of barring access to its headquarters for the media due to the "risk that would come from convening such a vast number of people in one place".

Livestreams of the beginning of meetings will instead be made available to journalists at a press center assembled in a nearby hotel.

In a statement on Tuesday OPEC said it was following UN guidelines for such meetings and planned to "shorten the format of such gatherings, limit the number of participants and cancel any related side-events".

source: news.abs-cbn.com

OPEC to try to stem oil price plunge amid coronavirus slowdown

LONDON — The OPEC club of oil-producing countries meets Thursday in Vienna as they weigh how to react to a sharp drop in global oil demand due to the outbreak of the new coronavirus.

The extraordinary 2-day meeting will see OPEC, led by Saudi Arabia, and its allies in the so-called OPEC+ group -- foremost among them Russia -- discuss how to halt the sharp fall in oil prices in the past two months as the epidemic has spread.

At their last meeting in December, the producers agreed to cut production by 500,000 barrels per day, with Saudi Arabia offering a further 400,000 barrels of "voluntary" cuts.

Prices were already under pressure at that point from abundant reserves and weak global growth.

The cuts announced in December initially had the desired effect of an uptick in prices but the epidemic has since sent them plunging back down again.

The 2 benchmarks for oil prices, Brent in Europe and WTI for the US, have fallen around 30 percent since early January and have tested their lowest levels for more than year.

In Asian trade on Tuesday Brent crude was up 2.5 percent at $53.17 per barrel and West Texas Intermediate was 2.7 percent higher at $48.01.

OPEC's "joint technical committee" (JTC) met last month and recommended a cut of 600,000 barrels to ward off the effects of the coronavirus slowdown.

But according to Craig Erlam, analyst at Oanda, this figure "won't be enough", with huge oil consumer China still mired in the fallout from the virus and outbreaks now occurring around the world.

Last week the Financial Times reported that Saudi Arabia wanted to bring the cut up to a million barrels a day.

RUSSIA'S MIXED SIGNALS

The success of this week's summit, which is being held three months ahead of OPEC's next scheduled meeting, will hinge on the alliance between Saudi Arabia and Russia which has been much in evidence at previous meetings.

However, Russia's leadership has been sending mixed signals.

On Thursday, Russian Energy Minister Alexander Novak said Moscow wanted "to cooperate further in the context of the multilateral relations of OPEC".

But on Sunday President Vladimir Putin was quoted as saying that "the current level of oil prices is acceptable" as it was still above the "42.4 dollars per barrel of Brent that is used as a base level in our macroeconomic policy" -- notably for calculating the budget.

Saudi Arabia is thought to be counting on prices being twice that high, SEB analyst Bjarne Schieldrop told AFP.

"Russia is sending a double message" to other producers and to the market, according to Schieldrop.

Now that there is "more clarity that demand will be hurt badly (from the epidemic), Russia will likely join in with cuts," he said, adding: "The only doubt is how much and how long."

CAUGHT IN A BIND

The International Energy Agency has revised down its forecast for demand for oil in 2020 due to the effects of the virus, estimating it at 825,000 barrels per day, the lowest level since 2011.

Producers outside OPEC are helping to keep supply plentiful, chief among them the US, followed by Brazil, Norway and even Guyana, which has just started shipping oil from a recently discovered field.

All that has added to the downward pressure on prices and left OPEC caught in a bind with no clear options before it.

Another production cut would boost prices but would further diminish OPEC's market share, while a more conservative cut might fail to register on the markets.

Rober Yawger of Mizuho told AFP that he was expecting a cut of around a million barrels per day.

But even that "will probably be enough to support the market (only) a little bit, maybe for a day or so," he said.

Contacted by AFP meanwhile, the Austrian foreign affairs ministry said it had reminded OPEC of its coronavirus recommendations for international meetings -- with Vienna a common venue -- including the option of delaying a meeting altogether.

Agence France-Presse

Virus to cut forecast oil demand growth by a quarter this year - Rystad Energy

OSLO - The coronavirus outbreak will cut growth in global oil demand by a quarter this year compared to earlier forecasts, Norway's biggest independent energy consultancy Rystad Energy predicted on Tuesday.

Oslo-based Rystad now predicts global oil demand will grow by 820,000 barrels per day (bpd) in 2020, down from a December forecast of 1.1 million bpd.

Crude prices have fallen sharply since news of the virus outbreak first emerged in mid-January.

The outbreak will primarily affect demand in the early part of the year, with the first quarter now expected to see growth of just 100,000 bpd, before consumption recovers later in the year, Rystad argued in a research note.

"Our current assessment implies that the impact of coronavirus will persist throughout all of February and March and will then gradually subside towards June," it added.

In a worst-case scenario however, if travel restrictions last longer, the overall impact for the year could be to lower 2020 demand growth to 650,000 bpd, the consultancy said. (Reporting by Terje Solsvik; Editing by Gwladys Fouche and Jan Harvey)

source: news.abs-cbn.com

WHO: World currently ‘not in a pandemic’ of China virus

GENEVA, Switzerland - The World Health Organization (WHO) said Tuesday that the outbreak of the deadly novel coronavirus, which has spread from China to two dozen countries, does not yet constitute a "pandemic".

"Currently we are not in a pandemic," Sylvie Briand, head of WHO's Global Infectious Hazard Preparedness division, told reporters in Geneva.

Instead, she said, "we are at the phase where it is an epidemic with multiple foci."

The disease has killed more than 425 people and infected a further 20,000 in China, nearly all of them in central Hubei province -- the epicenter of the outbreak -- and spread to two-dozen countries since it emerged in December.

Briand said that while there is rapid spread of transmission in Hubei, the cases outside the province are mainly "spillover cases" with sporadic clusters of transmission.

At the same time, authorities in China have taken dramatic measures to halt transmission, while other affected countries have also taken steps to avoid the spread of the virus.

"We hope that based on those measures in Hubei but also in other places where we have had spill-over, we can stop transmission and get rid of this virus," she said.

source: news.abs-cbn.com

Iraq says OPEC weighing output cut over virus outbreak

BAGHDAD - OPEC members and their ally Russia are discussing a further cut to crude oil output at a meeting in Vienna because of China's coronavirus epidemic, Iraq's oil ministry said Tuesday.

Crude prices have tumbled since the deadly outbreak in the world's second-biggest economy, which is a huge consumer of crude.

The Organization of the Petroleum Exporting Countries is holding a meeting of a "joint technical committee" in Vienna on Tuesday and Wednesday to discuss the virus's impact and whether an output reduction is needed.

"Depending on the needs of the market and how it's been affected by the coronavirus, will a cut be necessary? This is being discussed as the technical reports are presented," said Iraq's oil ministry spokesman Assem Jihad.

"The technical committees are discussing the recommendations, which they will elevate to their ministers. Any further cut to outputs would only be announced in a ministerial meeting," Jihad told AFP. 

He said those gathered would also consider bringing forward a March ministerial meeting to February "depending on the market's needs and what happens with the virus."

Iraq is OPEC's second-biggest oil producer.

The new coronavirus has killed more than 400 people and infected a further 20,000 in China since emerging in December, and has also spread to more than 20 other countries.

The US benchmark oil contract, WTI, has fallen by around 18 percent over the past month.

"For now, the market seems content that China will contain and manage the virus situation, and that the worst will soon be over with no accelerated spreading outside of China, and that OPEC+ will step in with cuts and prevent a surplus and a stock building," said Bjarne Schieldrop, chief commodities analyst at Nordic bank SEB.

Top oil exporter and OPEC kingpin Saudi Arabia said this week that the impact of the virus on oil demand was "extremely limited" and "driven by psychological factors".

But if the virus continues to spread, there could be a more severe hit to the market, said Neil Wilson, chief market analyst for Markets.com in London.

"This kind of oil demand shock has not been seen for over a decade. The longer the lockdown in China and travel restrictions globally, the greater the impact," he said. 

Russian energy minister Alexander Novak, said Friday the crisis could lead to lower demand for hydrocarbon fuels.

The OPEC cartel regularly convenes with non-members led by Russia over how to influence oil prices.

OPEC and its allies in December extended an existing agreement to curb crude oil production to prop up

source: news.abs-cbn.com

Chevron slashes asset value by $10-$11 billion on low oil, gas prices

NEW YORK -- Chevron said Tuesday it would slash the value of its assets by $10 billion to $11 billion due to weaker oil and natural gas prices that prompted the company to consider abandoning some projects.

The move hit a number of areas, including gas-related projects in the Appalachian region in the United States, a Canadian liquefied natural gas project and an oil-rich project in the Gulf of Mexico.

The company also said it is weighing "strategic alternatives," including divestment, for some of the assets.

The downgrade reflects a weakening commodity price outlook that last week prompted the Organization of the Petroleum Exporting Countries to deepen output cuts to defend oil prices amid sluggish global economic growth.

Natural gas prices also look vulnerable, due in part to a glut of supply following heavy investment in shale-rich projects like the Marcellus Shale and Utica Shale in Pennsylvania and West Virginia where Chevron operates.

Chevron said it set a $20 billion capital budget for 2020, flat with the level in both 2018 and 2019.

"We are positioning Chevron to win in any environment by ratably investing in the highest-return, lowest-risk projects in our portfolio," Chevron Chief Executive Michael Wirth said in a news release.

"This will be the third consecutive year with organic capital spending held flat at $20 billion, continuing our capital discipline through the cycle. Our emphasis on short cycle investments is expected to deliver improved returns on capital and stronger free cash flow over the long-term."

Key spending priorities in 2020 include continued investment in the Permian Basin in Texas, an expansion at its Tengiz project in Kazakhstan and various sites in the Gulf of Mexico.

Shares of Chevron fell 0.4 percent to $117.46 in after-hours trade.

Agence France-Presse

Aramco hopes to repair remaining damage from attacks by end-Nov

KHURAIS FIELD, Saudi Arabia - Oil major Saudi Aramco hopes to fix by the end of November the last four key pieces of equipment damaged during attacks last month, in a move to allow it to fully regain production capacity, company officials said on Saturday.

The mid-September attacks on the Abqaiq and the Khurais plants caused damage that halved the crude output of the world's top oil exporter by shutting down 5.7 million bpd of production, driving a spike in oil prices.

Yemen's militant Houthi group claimed responsibility but a U.S. official said the attacks originated from southwestern Iran and Riyadh blamed Tehran. Iran, which supports the Houthis in Yemen's war, has denied involvement.

Aramco restored oil production of around 10 million barrels per day within 10 days and said it was on track to regain its maximum capacity of 12 million bpd by the end of November.

Thousands of people have been working to restore full production of the key source of revenues for the kingdom. Saudi Arabia is preparing to float a small stake in Aramco this or next year in one of the world's biggest share sales ever.

At Abqaiq, the attacks hit five oil processing towers and three were still being restored, Khalid Buraik, vice president of Aramco's Southern Area Oil Operations, told several media invited to the facilities on Saturday. Abqaiq is the world's biggest oil processing facility and has 18 towers.

Buraik said he expected the three towers to be fully repaired within six weeks.

The attacks on Khurais damaged four of five towers. Three had been repaired, said a local senior manager who asked not to be named because he is not allowed to speak to media.

Khurais can process around 1.5 million bpd of crude and Abqaiq around 7 million, though it usually works well below its capacity at around 5 million.

Aramco's current crude oil production capacity stands at 11.3 million bpd, Saudi officials have said, some 0.7 million below the normal level. The kingdom produces just under 10 million bpd as it caps its output as part of an OPEC agreement. 

source: news.abs-cbn.com

Despite Saudi turmoil, new oil shock unlikely

NEW YORK -- The past week's sudden surge in oil prices brought to mind the nightmare of shortages, but it's not too likely motorists will be queueing to fill up around the world, analysts say.

All it took was a September 14 strike on key oil infrastructure in Saudi Arabia to abruptly leave the world's main supplier producing just half its normal amount. That sent the price of Brent crude flying 15 percent higher in a single day.

The price on a barrel of crude has come back down since then and by Friday was trading around $65. 

Given the slowdown in the global economy and the abundance of crude produced worldwide, the prospect of a $100 barrel, for now, doesn't look too likely.

"In essence, the world is far better equipped to handle oil shocks than it was in the '70s," explained Harry Tchilinguirian, the head of commodity research at BNP Paribas.

In 1973, after an embargo by the Organization of the Petroleum Exporting Countries (OPEC) against Israel's allies in the midst of the Yom Kippur War, and in 1979, after the Iranian revolution, crude oil prices soared in just a few months, bringing developed economies to their knees.

Reduced dependence

"Currently, an oil shock would hardly have the same devastating effects" because countries grew accustomed to such events, economists at Commerzbank said in a note.

On top of that, "central banks would not react to a supply shock with massive interest rate hikes to combat rising inflation," they said.

Most importantly, however, economies have reduced their dependence on oil.

Consumption in the United States, for example, rose from 17.3 million barrels per day (mbd) in 1973 to 20.5 mbd in 2018, an increase of only 18 percent even as the country's real gross domestic product jumped 230 percent. 

In Germany, households spent only 2.6 percent of their budget on fuel in 2018.

Many economies have taken strides away from heavy oil consumption, thanks to transport and energy-efficient industries, and alternative sources such as natural gas or renewable energy.

When oil prices held well above $100 a barrel between 2011 and 2014, it did not lead to economic collapse. The world has also now become less dependent on a few huge producers.

The first oil crisis led to the creation in 1974 of the International Energy Agency, which requires OECD countries to keep in reserve the equivalent of at least 90 days of their net imports of crude.

On top of that, oil production has branched far beyond the Middle East, said Tchilinguirian, referring to North Sea oil exploited since the 1980s, deep-sea exploitation off the coast of West Africa and Brazil, and the oil sands of Canada.

The United States, long deeply dependent upon imports, has become a major producer and exporter thanks to shale oil and new technologies.

Such factors help smooth things out in the event of a major disruption like the attack on Saudi facilities.

As such, a country like Saudi Arabia would probably no longer decide to voluntarily suspend its exports "because it could lose its status as a reliable supplier," says Alan Gelder, refined products specialist for Wood Mackenzie.

Even if an oil shock is unlikely, "you can never say there is zero risk," said Andrew Lebow, oil market specialist for Commodity Research Group.

"Especially," he added "if there is a major war that closes the Strait of Hormuz," which a third of all petroleum products shipped by sea pass through.

The effects of a possible oil shock, however, "should not be underestimated," the Commerzbank economists warned. 

"Many economies are currently struggling with problems anyway and the central banks have little room for maneuver (...) to help the affected economies," they said.

source: news.abs-cbn.com

New Saudi oil minister endorses production cuts

ABU DHABI - Saudi Arabia's new energy minister, Prince Abdulaziz bin Salman, said Monday that oil production cuts would benefit all exporting nations, in an indication he will support further reductions to address an oversupplied market and sagging prices.

In his first comments since being appointed by his father King Salman on Sunday, the minister signaled no major change in approach in Saudi Arabia, the de facto OPEC leader which pumps about a third of the cartel's oil.

"The pillars of our oil policy are pre-determined and will not change," he told Saudi broadcaster Al-Arabiya.

The prince was in Abu Dhabi to attend the World Energy Congress, followed by a meeting on Thursday of the Joint Ministerial Monitoring Committee (JMMC) of the OPEC+ alliance for a supply cut deal reached last year.

The ministers will consider fresh reductions, even though analysts are doubtful such a move would succeed in bolstering crude prices which have been badly dented by the US-China trade war.

Crude prices are moving around levels of $60 a barrel, in contrast with more than $75 a year ago, but were given a boost Monday by the Saudi official's comments, with West Texas Intermediate oil for October delivery advancing 53 cents to $57.05 a barrel.

Prince Abdulaziz said that the trade war, which has triggered fears of a global recession, has cast a "fog" over the oil market.

However, he appeared to swing his support behind further curbs to rebalance the crude market.

"Cutting output will benefit all members of OPEC," he told Al-Arabiya on the sidelines of the conference, but added to reporters later that "it would be wrong" for him to pre-empt the decision of the alliance.

The appointment of Prince Abdulaziz, half-brother to de facto ruler Crown Prince Mohammed bin Salman, marks the first time a royal family member has been put in charge of the all-important energy ministry.

He replaces veteran official Khalid al-Falih as the world's top crude exporter accelerates preparations for a much-anticipated stock listing of state-owned oil giant Aramco, expected to be the world's biggest.

"Prince Abdulaziz is very experienced and has served in the energy industry for decades," Giovanni Staunovo, an analyst at UBS Group AG in Zurich, told Bloomberg News.

"His comments today suggest we shouldn't expect any major policy changes from the kingdom, which still wants to see oil inventories falling."

The OPEC petroleum exporters' cartel and key independent producers want to halt a slide in prices that has persisted despite previous output cuts and US sanctions that have squeezed supply from Iran and Venezuela.

Analysts say the JMMC monitoring body has limited options when it meets in Abu Dhabi to formulate recommendations ahead of an OPEC+ ministerial meeting in Vienna in December.

UAE Energy Minister Suheil al-Mazrouei said Sunday the group would do "whatever necessary" to rebalance the crude market, but admitted the issue was not entirely in the hands of the world's top producers.

The market is no longer governed by supply and demand but is being influenced more by US-China trade tensions and geopolitical factors, he said. 

Analysts say that while cuts could help prices, they could also mean producers lose further market share.

Prince Abdulaziz also alluded to the sense that Saudi Arabia is shouldering the burden of production cuts, while other nations -- notably Nigeria and Iraq -- are flouting the limitations.

Speaking to reporters in Abu Dhabi, he said that one or two countries "need to be more committed" in order to bring benefits to the entire industry.

The 25-nation OPEC+ group, dominated by the cartel's kingpin Saudi Arabia and non-OPEC production giant Russia, agreed to reduce output in December 2018.

That came as a faltering global economy and a boom in US shale oil threatened to create a global glut in supply.

Previous supply cuts have mostly succeeded in bolstering prices. 

But this time, the market has continued to slide -- even after OPEC+ agreed in June to extend by nine months an earlier deal slashing output by 1.2 million barrels per day (bpd).

The new factor is the trade dispute between the US and China, whose tit-for-tat tariffs have created fears of a global recession that will undermine demand for oil.

source: news.abs-cbn.com

Kuwait's ruler in US hospital for tests, postpones Trump meeting

DUBAI - Kuwait's 90-year-old ruler has been admitted to a hospital in the United States for medical tests and postponed a meeting with US President Donald Trump planned for this week in Washington, state news agency KUNA said on Sunday.

Emir Sheikh Sabah al-Ahmad al-Sabah, who has ruled the US ally and OPEC oil producer since 2006 and steered its foreign policy for more than 50 years, had been due to meet Trump on Thursday.

That meeting will occur at a later date, KUNA said, citing a senior official in the emir's office. It had said last month he was in "good condition" after suffering an unspecified health setback.

He held public meetings with members of his Cabinet in Kuwait before travelling to the United States.

The White House confirmed that Trump had been informed of the postponement because of the emir's hospitalization.

"The President wishes his friend, the Emir, a speedy recovery and looks forward to welcoming him back to Washington as soon as he is feeling better," White House spokesman Judd Deere said. 

"The Emir is a well-respected leader and has been a tremendous partner of the United States in tackling challenges in the region." 

source: news.abs-cbn.com

Oil majors to mull fresh cuts as trade war hits prices

DUBAI - Top oil producers will consider fresh output cuts at a meeting this week, but analysts are doubtful they will succeed in bolstering crude prices dented by the US-China trade war.

The OPEC petroleum exporters' cartel and key non-OPEC members want to halt a slide in prices that has continued despite previous production cuts and US sanctions that have squeezed supply from Iran and Venezuela.

Analysts say the OPEC+ group's Joint Ministerial Monitoring Committee, which monitors a supply cut deal reached last year, has limited options when it meets in Abu Dhabi on Thursday.

UAE Energy Minister Suheil al-Mazrouei said Sunday the group would do "whatever necessary" to rebalance the crude market, but admitted that the issue was not entirely in the hands of the world's top producers.

Speaking at a press conference in Abu Dhabi ahead of the World Energy Congress, to start Monday, he said the oil market is no longer governed by supply and demand but is being influenced more by US-China trade tensions and geopolitical factors. 

The minister said that although further cuts will be considered at Thursday's meeting, they may not be the best way to boost declining prices.

"Anything that the group sees that will balance the market, we are committed to discuss it and hopefully go and do whatever necessary," he said.

"But I wouldn't suggest to jump to cuts every time that we have an issue on trade tensions."

While cuts could help prices, they could also mean producers lose further market share, analysts say.

"OPEC has traditionally resorted to production cuts in order to shore up the prices," said M. R. Raghu, head of research at Kuwait Financial Centre (Markaz). 

"However, this has come at the cost of reduction in OPEC's global crude market share from a peak of 35 percent in 2012 to 30 percent as of July 2019," he told AFP.

The 24-nation OPEC+ group, dominated by the cartel's kingpin Saudi Arabia and non-OPEC production giant Russia, agreed to reduce output in December 2018.

That came as a faltering global economy and a boom in US shale oil threatened to create a global glut in supply.

Previous supply cuts have mostly succeeded in bolstering prices. 

But this time, the market has continued to slide -- even after OPEC+ agreed in June to extend by nine months an earlier deal slashing output by 1.2 million barrels per day (bpd).

The new factor is the trade dispute between the world's two biggest economies, whose tit-for-tat tariffs have created fears of a global recession that will undermine demand for oil. 

Saudi economist Fadhl al-Bouenain said the oil market has become "highly sensitive to the US-China trade war".

"What is happening to oil prices is outside the control of OPEC and certainly stronger than its capability," Bouenain told AFP.

"Accordingly, I think OPEC+ will not resort to new production cuts" because that would further blunt the group's already shrunken market share, he said.

European benchmark Brent was selling at $61.54 per barrel Friday, in contrast with more than $75 this time last year but up from around $50 at the end of December 2018. 

The deliberations also coincide with stymied production from Iran and Venezuela and slower growth in US output, meaning that supplies are not excessively high.

"US shale output growth does not have the same momentum as in previous cycles, and OPEC production is at a 15-year low, having fallen by 2.7 million barrels per day over the past nine months," Standard Chartered said in a commentary last month.

"We think that the oil policy options for key producers are limited, for the moment," the investment bank said. 

No decisions will be taken at Thursday's meeting, but it should produce recommendations ahead of an OPEC+ ministerial meeting in Vienna in December.

Rapidan Energy Group said the alliance might need to cut output by an additional one million bpd to stabilize the market.

But the problem will be deciding which member countries will shoulder the burden of any new cuts.

Saudi Arabia, which is the de facto leader of OPEC and pumps about a third of the cartel's oil, took on more than its fair share last time around.

It has also undergone a major shake-up in its oil sector, announcing the replacement of energy minister Khalid al-Falih with Prince Abdulaziz bin Salman in the early hours of Sunday morning ahead of a much-anticipated stock listing of state oil giant Aramco.

Bouenain said he believes that Riyadh is likely to resist taking on further cuts, given the impact on the kingdom's revenues.

Raghu said that "without a favorable resolution to the dispute, OPEC's production cuts will not result in a sizeable uptick of oil prices."

source: news.abs-cbn.com