Crude futures rise ahead of OPEC+ meeting on deeper production cut talks

New York — 0230 GMT: Crude oil futures rose in mid-morning trade in Asia Thursday ahead of the OPEC+ meeting later in the day that will discuss deepening oil production cuts, even though the outcome is far from certain.

At 10:30 am Singapore time (0230 GMT), May ICE Brent crude futures were up 83 cents/b (1.62%) from Wednesday's settle at $51.96/b, while the NYMEX April light sweet crude contract was 70 cents/b (1.50%) higher at $47.48/b.

"Prices could find some support from better risk sentiment and the ongoing hope from the OPEC+ meeting taking place today [Thursday] and on Friday," AxiCorp's chief market strategist Stephen Innes said.

OPEC+ will be discussing deeper production cuts amid weaker global demand caused by the coronavirus outbreak at the event.

Nonetheless, uncertainty looms after mixed indications emerged from a ministerial advisory committee in Vienna on Wednesday.

Saudi energy minister Prince Abdulaziz bin Salman had pressed his case for the OPEC+ coalition to nearly double its output cuts, S&P Global Platts reported Wednesday.

However, Russian counterpart Alexander Novak said the group should stick with its current 1.7 million b/d cut accord until the end of the second quarter, according to sources familiar with the talks.

"Unless OPEC over-delivers, the market is bound to be disappointed given the prevailing view that anything short of 1 million b/d cut, oil is going to resume its downtrend amid demand concerns as a result of the coronavirus," Innes added.

Higher US production could also cap further price gains. Total US crude output rose 100,000 b/d to 13.1 million b/d during the week ended February 28, EIA data released Wednesday showed.

The record-high output outweighed any bullish pressure from a smaller-than-expected 784,000-barrel build in commercial crude stocks.

Meanwhile, oil demand is expected to contract by 150,000 b/d in 2020, reversing an original call for 1.1 million b/d growth before the coronavirus outbreak, according to Goldman Sachs.

Refineries in China are estimated to have cut throughput by 2.9 million b/d in February, according to Platts Analytics. China's oil demand is expected to grow by only 170,000 b/d in 2020, 20% of its original estimate.