Crude oil futures dip as market await Russia's decision on supply cuts

Singapore — 0225 GMT: Crude oil futures dipped during mid-morning trade in Asia Friday after uncertainty surrounding OPEC+ supply sparked off a sharp decline overnight Thursday, as the market look to Russia to approve the proposal for deeper production cuts.

At 10:25 am Singapore time (0225 GMT), May ICE Brent crude futures were down 48 cents/b (0.96%) from Thursday's settle at $49.51/b, while the NYMEX April light sweet crude contract was 40 cents/b (0.87%) lower at $45.50/b.

ICE May Brent settled down $1.14/b at $49.99/b Thursday amid fears of a non-deal by OPEC+. This marked the lowest front-month Brent settle since July 24, 2017.

OPEC on Thursday announced a plan to slash another 1 million b/d of its own crude oil production and to ask Russia and nine other non-OPEC countries to cut 500,000 b/d of their output through the second-quarter.

"The market was rattled by comments from the group warning that if Russia didn't join them in reducing output, there would be no agreement at all," ANZ analysts said Friday.

The deal and its total 1.5 million b/d in new supply curbs -- on top of the coalition's existing 1.7 million b/d cuts -- is fully contingent on Russia's approval, ministers said.

"If Russia fails to agree to the proposal, it is unlikely OPEC will go ahead with its share of 1 million barrel per day supply cut, leaving the market heavily oversupplied during this coronavirus episode and further depressing crude oil prices," OCBC analysts said Friday.

Russian energy minister Alexander Novak is scheduled to return to Vienna on Friday for talks with OPEC, along with the other non-OPEC ministers.

OPEC further slashed its oil demand growth forecast on Thursday due to the outbreak, and now sees 2020 demand expanding just 480,000 b/d, down from 990,000 b/d in its previous forecast on February 12.

Currently, S&P Global Platts Analytics projects oil demand to grow 240,000 b/d in 2020, a downward revision of 1.1 million b/d since January, with further revisions possible.