Opec, allies weigh response as oil plunges on virus panic

Bloomberg

The Organisation of Petroleum Exporting Countries (Opec) and its allies considered how to respond to a plunge in oil prices, with Russia signaling for the first time it was open to Saudi Arabia’s push for an emergency meeting.
Potential dates being discussed are February 8-9 and February 14-15, though for now the next regular meeting on March 5-6 remains on the schedule, a delegate said.
For days, the kingdom has been pressing to bring forward a meeting of the coalition, as the threat to demand from Asia’s coronavirus pushes prices to a six-month low. Russia has been rebuffing the requests and even said more time was needed to assess the situation, yet added it was willing to convene and even act if needed. Opec is holding a meeting of technical representatives — the Joint Technical Committee — on Tuesday and Wednesday to assess the coronavirus’ effect on markets, according to delegates.
“In principle, we’re ready to react on such things,” Interfax reported Energy Minister Alexander Novak saying. “But for that we need to assess the situation more accurately, monitor how it will develop in coming days.”
Crude traded near $51 a barrel in New York after a slump of about 16% in January, leaving prices far below the levels most members of the Opec need to cover government spending.
China is the oil market’s primary source of demand growth and measures taken to slow the spread of the coronavirus — including a lock-down in one of the country’s major cities and the unprecedented extension of the Lunar New Year holiday — could wipe out a big chunk of that additional consumption.
Consultant Energy Aspects Ltd. said Opec is considering a proposal to deepen current production curbs by about 500,000 barrels a day, though there’s no consensus on the idea yet. As Opec and its partners are already in the midst of steep production cutbacks, many analysts are skeptical on how much more they’re willing to do.
The group unveiled a new set of supply curbs just over a month ago. To implement these, Saudi Arabia has already slashed production to lowest since 2014.
Russia, which has become the most important producer in the coalition alongside kingdom, has typically taken some persuading to sign up for additional cuts.
There are already signs that physical oil markets are coming under pressure, as the premium on prompt Brent crude contracts versus later deliveries
begins to diminish.