By Peter Nurse
Investing.com - Oil prices pushed lower Monday, continuing the recent weakness in the wake of the virus outbreak in China, but losses were limited by reports that some major oil producers were planning deeper production cuts to bring the market back into balance.
By 4:20 AM ET (1320 GMT), U.S. crude futures were down 0.1% at $51.52 a barrel. U.K. Brent, the global crude benchmark, was down 0.7% at $56.19 a barrel.
Brent posted a monthly loss of just over 14% for January, its biggest slide since November 2018, when it lost 22%. WTI fell nearly 16% on the month, its worst since May.
These hefty losses, largely on the back of a predicted drop in demand from China, the world’s largest crude importer, have caused unease with the governments of many of the major oil producing nations.
The Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, are consequently considering a further cut in their oil output of 500,000 barrels per day, Reuters reported, citing sources. The group is considering holding a ministerial meeting on Feb. 14-15, Reuters said, earlier than the current schedule for a meeting in March.
Additionally the Wall Street Journal reported Monday that Saudi Arabia is pushing for a major, short-term oil production cut, citing OPEC officials.
Still, the overall sentiment in the oil market remains weak.
The number of deaths associated with the virus continues to rise, reaching 361 with 17,205 confirmed cases, as of early Monday, while most Chinese industries are likely to be shut until Feb. 10, at the earliest.
“The coronavirus could potentially impact the annual level of world trade in 2020, as it's not certain that factories and logistics will be able to catch up and fully compensate for earlier delays, given the limited capacity,” said analysts at ING in a research note. “If they cannot fully recuperate, global trade growth in 2020 will suffer.”
Signs of the slowdown in demand are already visible, as China's Sinopec Corp, Asia's largest refiner, said it would cut refinery output this month by about 600,000 barrels a day, roughly 12% of the average daily output last year, Bloomberg reported Monday.
Chinese oil demand has dropped by about three million barrels a day, or 20% of total consumption, Bloomberg reported, citing people with inside knowledge of the country’s energy industry. It cited data from research firm Kpler showing that the country's rolling weekly average oil imports had fallen to only 8 million barrels a day from 13 million b/d as recently as Jan.14.