Crude oil prices ended lower, giving up early gains as major oil producers, including Saudi Arabia, struggled to bring Russia on board for deeper supply cuts to try to offset a slump in demand caused by the coronavirus outbreak.
As the outbreak has spread, oil has dropped sharply, and rebounds have been short-lived. Brent crude futures settled down 73 cents, or 1.4%, to $51.13 a barrel, after reaching a high of $53.03 in the morning. U.S. West Texas Intermediate (WTI) ended down 40 cents to $46.78 a barrel.
Saudi Arabia and other members of the Organization of the Petroleum Exporting Countries are seeking to persuade Russia to join in large additional oil output cuts to prop up prices. The group, known as OPEC+, has already cut 2.1 million bpd in supply, helping to shore up the price of crude.
The group wants to cut at least 1 million more bpd in supply from the market, OPEC sources told Reuters. Russia, which is not an OPEC member, is known for holding out on such deals until the last minute. As of Wednesday, a panel of several ministers from the group had not locked down an agreement.
Iran’s Oil Minister Bijan Zanganeh said the market was facing a surplus.
“Right now, the supply in the market is greater than demand,” Zanganeh said. “It’s necessary for OPEC and non-OPEC to make all their efforts to balance the market.”
Goldman Sachs cut its Brent price forecast to $45 a barrel in April while expecting Brent to gradually recover to $60 a barrel by the year-end.
The bank said while an output cut by OPEC “will help normalize oil demand and inventories later this year, they can’t prevent an already started large oil inventory accumulation.”
Morgan Stanley cut its second-quarter 2020 Brent price forecast to $55 per barrel and its WTI outlook to $50 on expectations for reduced demand.
“The market is going to be weighed down by the coronavirus impact on demand destruction,” said Andrew Lipow, president of Lipow Oil Associates. “I do not see oil demand recovering to pre-virus levels for several months, as additional outbreaks in Europe and the U.S. are going to cause travel and meeting disruptions and demand destruction.”
Crude oil stocks in the United States grew by 785,000 barrels, the U.S. Energy Information Administration said, which was less than expected. Gasoline and diesel stocks both fell by more than 4 million barrels. Exports surged to nearly 4.2 million bpd.
“Today’s data confirms what the physical market has been telling us: It’s not that bad out here, at least for now,” said Scott Shelton, energy salesperson from United ICAP in Durham, North Carolina.