Dubai futures: Crude complex slides further, OPEC+ to meet Tuesday

Singapore — Benchmark Dubai crude future spreads continued their downward spiral on the first trading day for February, with OPEC's call for an urgent meeting of its technical committee on Tuesday and Wednesday doing little to assuage fears of a slowdown in oil demand on the back of the spread of the coronavirus.

At 11 am in Singapore Monday morning (0300 GMT), Dubai crude futures intermonth spreads fell from Friday's assessed levels as peripheral effects of the virus -- such as countries halting flights to China and jet fuel prices sinking to fresh lows -- reverberated across oil markets.

The March/April Dubai crude futures spread was pegged at 30 cents/b Monday at 0300 GMT, plunging from an assessed 45 cents/b on Friday at 4:30 pm in Singapore (0830 GMT).

Similarly the April/May spread was pegged at 22 cents/b Monday morning, down from 42 cents/b assessed Friday.

OPEC+ will hold a technical meeting on Tuesday and Wednesday to discuss the impact of the deadly coronavirus on oil demand, OPEC sources told S&P Global Platts on Sunday, as oil prices fall due to the outbreak.

No specific production cuts have been discussed, just talks over whether to move up the ministerial meeting, one source said.

Some members are "already panicking," an OPEC source said.

The outbreak is expected to blunt global oil demand by at least 900,000 b/d in February and 650,000 b/d in March, according to S&P Global Platts Analytics. In a worst case scenario involving travel curtailments, demand could drop by up 2.6 million b/d in February and 2 million b/d in March.

Flat prices for oil -- including those for benchmark Dubai cash and futures -- have taken a beating in January due to fears of the virus triggering an economic slowdown in China. The second-month Dubai futures flat price, which was assessed at $63.77/b on January 02, closed the month 11% down at $56.54/b on January 31.

Brent prices lost 12% in January to end at $56.62/b, while West Texas Intermediate plunged 16% to $51.56/b, making it the worst start to a year since 1991.

Flight cancelations to China, and restrictions on the travel of Chinese citizens to other countries are some of the measures that may impact the Asian behemoth's economy. Trade-related voyages via air, land and marine routes are also expected to be affected.

Several Arab countries are starting to halt their flights to China in an attempt to curb the spread of the virus, with Saudi Arabian Airlines and Qatar Airways issuing notices effective February 2 and 3, respectively.

The meeting of the Joint Technical Committee of the 23-member OPEC/non OPEC coalition known as OPEC+ in Vienna will determine whether the full ministerial meeting scheduled for March 5-6 should be moved forward, three OPEC sources said.

OPEC+ members are in the midst of cutting 1.7 million b/d, up from 1.2 million last year, as part of a deal reached in December. The new deal is supposed to last until the end of March.