OPEC+ committee enters third day of coronavirus talks over oil cuts

OPEC and its allies are hoping that a third day of talks Thursday will finally broker a consensus on how they should adjust their crude production to combat a coronavirus-induced hit to global oil demand.

Delegates on a technical committee advising the 23-country OPEC+ coalition will reconvene in Vienna at 9 am local time (0800 GMT), with OPEC kingpin Saudi Arabia having proposed deeper production cuts and major non-OPEC producer Russia still reluctant to commit, according to sources involved in the discussions. Russia has instead suggested extending the coalition's existing supply accord for three months beyond its end-March expiry, said one delegate, who asked not to be named due to the sensitivity of the talks.

"There are different points of view, but we are converging on the need to have real action," another delegate said. "We needed some time to evaluate and assess that. We are all flexible. This is a technical problem, not a political one."

The coronavirus has sparked fears of a major economic slowdown in China, the world's largest importer of crude, where quarantines and travel restrictions have caused a contraction in oil consumption. China sources some 70% of its crude imports from OPEC+ members, and its refineries are expected to slash runs by about 1 million b/d in February, according to S&P Global Platts Analytics.

The coalition has watched with alarm the sell-off in oil prices and called what was scheduled to be a two-day emergency meeting of its Joint Technical Committee this week to formulate a response.

The committee, co-chaired by Saudi Arabia and Russia, has met since Tuesday at the OPEC secretariat to review several scenarios projecting the viral outbreak's trajectory, including how its impact on oil demand would affect projects in each member country, according to delegates.

Several said they were confident that their deliberations would be finished by the end of Thursday, with much of the remaining work involving drafting a report with recommendations for ministers to review.

The next OPEC+ ministerial summit is set for March 5-6, but delegates have said it may be moved forward if immediate production cuts are agreed. No new meeting dates had been discussed by the committee, several said.

Any new output restraint would come on top of the group's existing 1.7 million b/d output cut accord that began in January and expires at the end of March.

Crude prices in afternoon Asia trading Thursday were building off of the previous day's rally on anticipation of an OPEC+ decision. At 0640 GMT, front-month ICE Brent futures were trading at $56.38/b, up 1.99% from Wednesday's close but still down some 18% since January 7, when Chinese authorities first identified the virus.