Major output cut awaiting non-OPEC desicion

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The world's major oil-producing countries are considering cuts to production as the spread of the coronavirus weighs on demand.

OPEC's technical committee recently discussed a 600,000 barrel-per-day cut, but that number has been raised to 1 million because of the sharp drop in prices.

West Texas Intermediate futures for April delivery added 65 cents, or 1.4%, to $47.43 a barrel on the New York Mercantile Exchange as of 10:16 a.m.in Singapore.

"It also agreed to recommend to the 8th OPEC and non-OPEC Ministerial Meeting a further adjustment of 1.5 mb/d until 30 June 2020 to be applied pro-rata between OPEC (1.0 mb/d) and non-OPEC producing countries (0.5 mb/d) participating in the Declaration of Cooperation", the statement quoted the oil minister as saying. Brent crude is now around $51 (£36) a barrel.

Ministers from OPEC+ meet on Friday in Vienna.

The OPEC proposal calls for its members to cut output by 1 million barrels a day, with another 500,000 barrels to be cut by non-member allies, like Russian Federation, who have been co-ordinating production measures with the cartel in recent years.

"OPEC+ negotiations tomorrow are likely to be more contentious than today's meeting".

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The success of the summit will above all hang on the alliance between Saudi Arabia and Russian Federation, the most important players in the Opec and Opec+ groupings respectively.

In December Opec agreed to slash oil production by around 1.7 million barrels per day to bolster the price, with Saudi Arabia choosing to curb its output by a further 400,000 barrels per day for three months.

It said two other sources confirmed talks were now focusing on additional cuts in excess of 1 million bpd.

Zangeneh said, "OPEC has played its role. Given their history of co-operation with OPEC, we expect they will agree". Nations across the globe have been forced to inject cash into slowing economies as they struggle to contain the rapidly spreading outbreak, with Goldman Sachs Group Inc. among banks and consultants warning of a significant hit to consumption this year. The economic research consultancy firm has therefore slashed its forecast for global economic growth in the first and second quarters of 2020.

The firm cited "the unprecedented stoppage of Chinese economic activity in February" and the current global spread of the Covid-19 virus.

China's top gas importer PetroChina has declared force majeure on natural gas imports following the coronavirus outbreak.

Prices found some support early in the session after a lower-than-expected rise in crude oil inventories in the United States, alleviating some concern about oversupply in the world's biggest oil consumer.

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