WASHINGTON (DTN) -- Oil futures on New York Mercantile Exchange and Brent crude on the Intercontinental Exchange eroded further on Monday, pressing both crude benchmarks to or near fresh 13-month lows. The losses came as Russia remains uncommitted to a proposed 600,000-barrel-per-day (bpd) production cut to be shared by Organization of the Petroleum Exporting Countries and partners in their effort to stabilize the market against a deepening demand shock in China.
At settlement, NYMEX March West Texas Intermediate futures moved down $0.75 to $49.57 per barrel (bbl) and ICE April Brent contract retreated $1.20 to $53.27 per bbl, the lowest settlement on the spot continuous chart since Dec. 28, 2018. Both crude benchmarks have extended their recent declines into the six consecutive week. NYMEX March RBOB futures dipped 0.26 cent to $1.5213 gallon and front-month ULSD contract declined 3.11 cents to $1.6122 per gallon.
Oil futures continued to be buffeted by the raging coronavirus in China, with officials from OPEC and allied partners led by Russia struggling to find a response. The technical panel for the 23-nation alliance recommended on Monday to extend their 1.7 million bpd production agreement until the end of 2020, and to also deepen those cuts by additional 600,000 bpd through the second quarter.
President of the conference, Algerian Energy Minister HE Mohamed Arkab, acknowledged that the coronavirus epidemic "has had particular negative impact on transportation, tourism and industry sectors in China," while stressing that "the situation is clear, and it requires a corrective action in the interest of all."
However, the developing crisis in the world's top oil importer appeared unclear to one member of the alliance -- Russia -- which continues to push back against proposed cuts.
According to TASS News, Russia's energy minister, Alexander Novak, said there was no evidence China would limit purchases of Russian crude exports, referring to a demand drop of 150,000 to 200,000 bpd as "insignificant."
However, most forecasts estimate Chinese crude consumption will decline by at least 500,000 bpd in the current quarter, with worst-case scenarios calling for a drop of 3 million bpd as a result of the fast-spreading disease.
S&P Platts analysts expect refineries in the world's second-largest oil consumer will slash throughput by 1 million bpd in February alone.
Market participants will get an in-depth analysis of developing demand shock through this monthly market reports due out this week, starting on Tuesday, Feb. 11, with the Short-term Energy Outlook from the U.S. Energy Information Administration and Paris-based International Energy Agency on Thursday, Feb. 13. OPEC will publish its Monthly Oil Market Report on Wednesday, Feb. 12, where cartel will provide an update on the group's compliance with production quotas.
According to the private survey, the 13-nation cartel pumped a collective 29.08 million bpd in January, down 470,000 bpd from the previous month. Production declines were mostly led by Saudi Arabia and other Gulf producers, while prolonged blockade of Libya's major oil fields also contributed to the drop. Excluding Libya, Iran and Venezuela, OPEC achieved a 128% compliance rate with their production agreement, while their market share has fallen to just 35% last month.
Liubov Georges can be reached at email@example.com
Copyright 2020 DTN/The Progressive Farmer. All rights reserved.