Picture: REUTERS
Picture: REUTERS

London — Oil prices edged higher on Friday on hopes that oil cartel Opec and other producers led by Russia (Opec+) may cut their output further amid falling demand for crude as China battles the coronavirus epidemic.

Brent crude futures rose 30c, or 0.6%, to $55.23 a barrel by 9.45am GMT, but were heading for a fifth weekly loss due to lingering fears over the impact of the virus. US West Texas Intermediate (WTI) crude futures were up 21c, or 0.4%, at $51.16 a barrel, also heading for a fifth consecutive week of losses.

A panel advising Opec+ suggested provisionally cutting output by 600,000 barrels per day (bpd), three sources told Reuters on Thursday.

Russian foreign minister Sergei Lavrov said on Thursday that Moscow supports co-operation with other producers. Energy minister Alexander Novak said on Friday, however, that Russia needed a few days to analyse the oil market and would clarify its position on deeper cuts next week.

Opec+, which pumps more than 40% of the world’s oil, has been withholding supply and agreed to deepen the cuts by 500,000 bpd from the start of this year, to 1.7-million bpd, nearly 2% of global demand.

“The oil market may be willing to show some patience until the Kremlin decides the next course of action — how patient remains to be seen,” BNP Paribas analyst Harry Tchilinguirian told the Reuters Global Oil Forum.

Prices came off earlier highs in the session after China’s central bank governor said the world’s second-biggest economy may experience disruptions in the first quarter.

Stimulus measures by the People’s Bank of China (PBOC) could also be supporting prices. The PBOC has pumped hundreds of billions of dollars into the financial sector this week to help steady markets and boost the economy, along with other measures.

Eurasia group said it estimates a contraction in oil demand in China, the world’s biggest importer of crude, of as much 3-million bpd in the first quarter from 2019 levels.

Meanwhile, JPMorgan cut its estimate for Brent to average $60.40 a barrel in 2020, down $4.1 from its earlier forecast. Oil prices have fallen by more than a fifth since the outbreak of the virus in the city of Wuhan in China.

ING Economics said in a note, “There is still plenty of uncertainty around the global balance, with it unknown how demand will evolve in coming months as a result of the coronavirus.”