[Asia Economy Reporter Jeong Hyunjin] The joint technical committee of the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC oil-producing countries, collectively known as OPEC+, which had been discussing whether to cut production amid the spread of the novel coronavirus infection (Wuhan pneumonia), failed to narrow differences and decided to extend the meeting by one more day.
According to CNBC and other media on the 5th (local time), the OPEC+ technical committee decided to extend the two-day meeting held in Vienna, Austria, by one more day. The meeting discussed whether to implement emergency production cuts considering the economic slowdown caused by the novel coronavirus and the resulting decrease in crude oil demand. Although the meeting lasted for two days, differences among oil-producing countries emerged, preventing consensus, leading to the extension of the meeting.
OPEC+ includes 14 OPEC member countries and 10 major oil-producing countries such as Russia. A source told foreign media that Russia did not agree to production cuts and proposed extending the meeting period. Russia has often shown reluctance to cut production, which has led to clashes with Saudi Arabia, which is pushing for cuts. Saudi Arabia is demanding a reduction of at least 500,000 barrels per day as an emergency response to the novel coronavirus.
John Kilduff, partner at Again Capital, said, "I heard that the Russian side prefers to monitor the situation a bit longer rather than risk losing market share." On January 30th, Alexander Novak, Russia's Energy Minister, mentioned that OPEC+ ministers could discuss preparations for the situation but that they needed to observe the situation for a few more days.
Internally, OPEC views the impact of the novel coronavirus as not very severe. According to OPEC's internal analysis, global crude oil demand is expected to decrease by about 400,000 barrels per day over the six months following the outbreak of the novel coronavirus. External organizations such as BP forecast a decrease of 300,000 to 500,000 barrels per day, which corresponds to a 0.5% reduction in global demand.
Meanwhile, on the same day at the New York Mercantile Exchange (NYMEX), March delivery West Texas Intermediate (WTI) crude oil closed at $50.75 per barrel, up 2.3% ($1.14) from the previous day. Although it had fallen below the $50 mark the day before, hitting a 13-month low, it regained the $50 level in just one day. Foreign media analyzed that the positive investment sentiment was influenced by news suggesting the possibility of developing a treatment for the novel coronavirus.
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