OIL FUTURES: Oil snaps six-session decline as OPEC+ output cuts come into focus

New York — Crude and product futures settled higher Monday amid optimism for OPEC+ to agree to further output cuts to offset coronavirus-stunted demand outlooks.

ICE May Brent settled up $2.23 at $51.90/b and NYMEX April WTI finished up $1.99 on the day at $46.75/b.

Lukoil Vice President Leonid Fedun said Monday he expects OPEC+ to agree to further output cuts, which could be more than 1 million b/d, with Russia agreeing to cut 200,000 b/d-300,000 b/d of production, the Prime news agency reported.

The 23-country OPEC+ group is expected to meet later this week in Vienna to discuss the future of its current 1.7 million b/d supply cut agreement that expires at the end of March. The group is weighing a recommendation to cut its quotas by another 600,000 b/d in light of weakened demand outlooks due to the global spread of COVID-19 coronavirus.

Monday's settle left front-month Brent and WTI were still down around 20% from January 20, when the coronavirus headlines first began to impact markets.

S&P Global Platts Analytics has adjusted its 2020 global oil demand growth outlook down to 860,000 b/d, marking the weakest forecast since 2011.

Bank of America, citing fading GDP growth, cut its crude price forecast for 2020 by $8/b in its latest BofA Global Research report. Brent is now forecast to average at $54/b, down from $62/b previously, and WTI is forecast at $49/b.

Russia has yet to state an official position on the OPEC+ agreement. Earlier Monday, energy minister Alexander Novak said he has not received proposals to increase the production cut by 1 million b/d. However, both Novak and Russian President Vladimir Putin have expressed support for continuing to cooperate through the OPEC+ agreement.

Expectations of a US interest rate cut pushed equity markets sharply higher Monday, adding further support to the oil complex.

The market is now pricing in a 100% chance of the Federal Open Market Committee lowering the Federal Funds target rate 50 basis points to 1%-1.25% at its March 18 meeting, according to CME Group analysis. The Dow Jones Industrial Average was trading around 470 points above its open at the close of oil trading Monday. The index later closed up nearly 1,300 points on the day.

NYMEX April ULSD settled up 5.14 cents at $1.5287/gal and April RBOB moved 5.68 cents higher on the day to settle at $1.5396/gal.

Front-month NYMEX RBOB settled at a rare premium to ULSD as unseasonably warm weather across the Northeast weighed on demand outlooks and slowed Monday's price rebound.