WASHINGTON (DTN) -- Following a soft start, oil futures on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange shifted higher in afternoon trade Thursday. Market participants await an official response from Russia on a proposed 600,000 barrels per day (bpd) production cut and new developments on the coronavirus outbreak in China, which reported an alarming surge in new infections overnight.
On the session, NYMEX March West Texas Intermediate futures moved up $0.25 to a $51.42 barrel (bbl) settlement and ICE April Brent contract advanced $0.55 to $56.34 bbl. NYMEX March RBOB futures finished little changed at $1.5802 gallon and front-month ULSD futures edged up 0.48 cents to settle at a two-week spot high $1.6805 gallon.
The oil complex posted modest gains on Thursday, likely finding support from reports Russian oil executives are inclined to rollover an OPEC+ supply agreement into the end of the second quarter. The current 1.7 million bpd in production cuts shared among 20 major oil producers are set to expire at the end of March, with Russian support for the pact seen critical in holding the coalition together. Yet, oil executives who attended a meeting with Russian Energy Minister Alexander Novak on Thursday said there was no final decision and gave no indication of whether deeper curbs were discussed.
The coalition is under mounting pressure to cut more supply as they struggle to find an adequate response for the lost demand in China. The Paris-based International Energy Agency estimated a 435,000 bpd drop in global oil consumption during the first quarter, with most of that decline attributed to the coronavirus outbreak in China. The latest development also prompted the agency to cut its outlook for global refinery runs, which it now expects to expand by a modest 700,000 bpd in 2020. The agency cut the run rate at refineries in China by 1.1 million bpd for the first quarter, and now forecasts China's refinery run rate to contract 500,000 bpd, year-on-year, in 2020.
Reuters reported China's key refineries, including state-owned Sinopec Corp, PetroChina, and China National Offshore Oil Company have significantly cut their crude processing rate in February.
Earlier in the session, oil prices came under pressure from an overnight surge in the number of new coronavirus cases in China's Hubei province -- the epicenter of the disease. After declining for two straight days, new infections spiked 40% to nearly 50,000 on Thursday. Top party officials in the province have been dismissed. Analysts point to the overnight shakeup as the biggest political fallout yet from the outbreak that has ravaged Chinas economy for over two months now.
Global equities moved mixed on Thursday, as investors digested the unexpected changes at the epicenter of the outbreak.
Liubov Georges can be reached at firstname.lastname@example.org
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