LONDON (Reuters) - Oil prices were little changed on Monday as concerns over the economic fallout from the coronavirus outbreak in China were offset by hopes that potential output cuts from major producers could tighten crude supply.
Brent crude (LCOc1) was at $57.18 a barrel, down 14 cents, by 1306 GMT after rising 5.2% last week, its biggest weekly gain since September 2019.
U.S. West Texas Intermediate crude (CLc1) fell 1 cent to $52.04 a barrel, after a 3.4% gain last week.
"Nothing goes down forever, as they say, and oil appears to have finally shaken off its bearish malaise," said Stephen Brennock of oil broker PVM.
"Virus anxieties were put on the back burner. Investors cheered a salvo of stimulus measures from China’s central bank ... sentiment was given a supportive jolt by expectations of a supply response from the OPEC+ producer alliance."
The International Energy Agency (IEA) said last week the virus is set to cause oil demand to fall by 435,000 barrels per day (bpd) year-on-year in the first quarter, in what would be the first quarterly drop since the financial crisis in 2009. < Demand drop is primarily related to the mild winter, less demand for home heating oil.
IEA does expect demand for oil to increase by 800,000 bpd in 2020, which compares to their forecast of 1,200,000 bpd growth a month ago.
Oil did rise last week for the first time since early January on optimism that Chinese economic stimulus measures amid the outbreak could lead to a recovery in oil demand in the world's largest importing country.
There are some indications of prompt demand for oil as the front-month Brent futures market has shifted to a backwardation, when near-term prices are higher than later-dated prices, from a contango.
Investors are also anticipating that the Organization of the Petroleum Exporting Countries and its allies, including Russia, will approve a proposal to deepen production cuts to tighten global supplies and support prices.
The group, known as OPEC+, has an agreement to cut oil output by 1.7 million bpd until the end of March.
A technical committee earlier this month recommended the group reduce production by another 600,000 bpd because of the impact from the coronavirus, though oil prices' first weekly gain since early January on Friday may give the producers pause.
"The more recent strength that we have seen in the market may also make OPEC+ complacent when it comes to taking action," ING said in a note.
"Already the group has failed to bring forward the meeting that was originally scheduled for early March. And if the market consolidates around current levels, OPEC+ may see little need to rush a decision."
Oil Price - Feb 17
Oil Price - Feb 17
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil Price - Feb 17
Chinese support measures buoy world stocks
LONDON (Reuters) - Global shares were buoyant on Monday as the promise of further policy stimulus from China to counteract the economic hit from a coronavirus outbreak calmed nervous investors.
Trading was light, with U.S. stocks and bond markets shut for a public holiday.
Both the pan-European STOXX 600 index and Germany's DAX reached record highs before paring some gains. (EU) The MSCI All-Country World Index, which tracks shares across 47 countries, was flat on the day.
In Asia, MSCI's broadest index of Asia-Pacific shares outside Japan advanced 0.14% to near last week's peak of 558.30, its highest since late January.
The gains were led by China, whose blue-chip index climbed 2.25% after the country's central bank lowered a key interest rate and injected more liquidity into the system.
Also whetting risk appetite was an announcement by China's finance minister on Sunday that Beijing would roll out tax and fee cuts.
"Traders are mindful of the fact the Chinese authorities intervened in the financial markets at the beginning of the month, when the domestic stock markets reopened after the Lunar New Year celebrations," said David Madden, market analyst at CMC Markets in London.
"Some dealers hold the view that Beijing will intervene in the markets again should the situation get much worse, which could explain the resilience of equity markets."
Fears about the jolt to the world economy from the coronavirus lingered, though, as the number of reported new cases in China rose to 2,048 as on Sunday from 2,009 the previous day. < The death toll from the coronavirus outbreak in mainland China reached 1,770 as of the end of Sunday, up by 105 from the previous day, according to the country's National Health Commission. At least 100 of the new deaths were from the province of Hubei, the epicentre of the epidemic, the commission said on Monday morning. Across the country, there were 2,048 new confirmed infections, about 1,933 from Hubei alone, pushing the new total to 70,548.
"The latest numbers from the Hubei province still suggest that the infection pace is slowing after the sudden jump following the methodology changes last week," Danske Bank said in a research note, highlighting that the number of new cases within China is the lowest since Jan. 23.
Restrictions were tightened further in Hubei over the weekend. Most vehicles were banned from the roads and companies told to stay shut until further notice.
Japan's Nikkei fell 0.7% after its economy shrank at the fastest pace in almost six years in the December quarter. The slowdown in the world's third-largest economy came amid concern the coronavirus effects will hurt output and tourism, stoking fears Japan may slump into recession.
The coronavirus also led trade-dependent Singapore to downgrade its 2020 economic growth forecast. China's economy is widely expected to slow sharply as well.
BULL RUN
South Korea's KOSPI index ended mostly flat. Australian, Singapore and Malaysian share indexes weakened.
Asia's woes have yet to spread to the United States, though. Wall Street indexes scaled record highs on Friday.
Talk of a middle class tax cut and a proposal to encourage Americans to invest in stocks boosted equity markets late last week, Betashares chief economist David Bassanese said.
Bassanese had misgivings about the plan, saying it reminded him of former U.S. President George Bush encouraging Americans to buy a home during a housing boom.
"It adds to my suspicion that this decade-long bull market could eventually end via a blow-off bubble, driven by central bank persistent low interest rate policy," he said in a note.
Later in the week, fresh manufacturing activity data for February are due for the euro zone, the United Kingdom and the United States. They are likely to capture some of the early impact of the viral epidemic.
Action was relatively muted in currency markets, with the US dollar up against the yen at 109.90 and the pound at $1.3015. It gained against the euro to $1.0840. < Strength of the US dollar is responsible for approximately $2/bbl of the oil price decline since the beginning of the year.
The risk-sensitive Aussie, which is also played as a liquid proxy for Chinese assets, ticked up 0.1% to $0.6721.
That left the dollar index flat at 99.135.
In commodities, gold fell 0.22% to $1,581.25 an ounce. Brent crude was flat at $57.31 a barrel and U.S. crude added 0.1% to $52.09.
LONDON (Reuters) - Global shares were buoyant on Monday as the promise of further policy stimulus from China to counteract the economic hit from a coronavirus outbreak calmed nervous investors.
Trading was light, with U.S. stocks and bond markets shut for a public holiday.
Both the pan-European STOXX 600 index and Germany's DAX reached record highs before paring some gains. (EU) The MSCI All-Country World Index, which tracks shares across 47 countries, was flat on the day.
In Asia, MSCI's broadest index of Asia-Pacific shares outside Japan advanced 0.14% to near last week's peak of 558.30, its highest since late January.
The gains were led by China, whose blue-chip index climbed 2.25% after the country's central bank lowered a key interest rate and injected more liquidity into the system.
Also whetting risk appetite was an announcement by China's finance minister on Sunday that Beijing would roll out tax and fee cuts.
"Traders are mindful of the fact the Chinese authorities intervened in the financial markets at the beginning of the month, when the domestic stock markets reopened after the Lunar New Year celebrations," said David Madden, market analyst at CMC Markets in London.
"Some dealers hold the view that Beijing will intervene in the markets again should the situation get much worse, which could explain the resilience of equity markets."
Fears about the jolt to the world economy from the coronavirus lingered, though, as the number of reported new cases in China rose to 2,048 as on Sunday from 2,009 the previous day. < The death toll from the coronavirus outbreak in mainland China reached 1,770 as of the end of Sunday, up by 105 from the previous day, according to the country's National Health Commission. At least 100 of the new deaths were from the province of Hubei, the epicentre of the epidemic, the commission said on Monday morning. Across the country, there were 2,048 new confirmed infections, about 1,933 from Hubei alone, pushing the new total to 70,548.
"The latest numbers from the Hubei province still suggest that the infection pace is slowing after the sudden jump following the methodology changes last week," Danske Bank said in a research note, highlighting that the number of new cases within China is the lowest since Jan. 23.
Restrictions were tightened further in Hubei over the weekend. Most vehicles were banned from the roads and companies told to stay shut until further notice.
Japan's Nikkei fell 0.7% after its economy shrank at the fastest pace in almost six years in the December quarter. The slowdown in the world's third-largest economy came amid concern the coronavirus effects will hurt output and tourism, stoking fears Japan may slump into recession.
The coronavirus also led trade-dependent Singapore to downgrade its 2020 economic growth forecast. China's economy is widely expected to slow sharply as well.
BULL RUN
South Korea's KOSPI index ended mostly flat. Australian, Singapore and Malaysian share indexes weakened.
Asia's woes have yet to spread to the United States, though. Wall Street indexes scaled record highs on Friday.
Talk of a middle class tax cut and a proposal to encourage Americans to invest in stocks boosted equity markets late last week, Betashares chief economist David Bassanese said.
Bassanese had misgivings about the plan, saying it reminded him of former U.S. President George Bush encouraging Americans to buy a home during a housing boom.
"It adds to my suspicion that this decade-long bull market could eventually end via a blow-off bubble, driven by central bank persistent low interest rate policy," he said in a note.
Later in the week, fresh manufacturing activity data for February are due for the euro zone, the United Kingdom and the United States. They are likely to capture some of the early impact of the viral epidemic.
Action was relatively muted in currency markets, with the US dollar up against the yen at 109.90 and the pound at $1.3015. It gained against the euro to $1.0840. < Strength of the US dollar is responsible for approximately $2/bbl of the oil price decline since the beginning of the year.
The risk-sensitive Aussie, which is also played as a liquid proxy for Chinese assets, ticked up 0.1% to $0.6721.
That left the dollar index flat at 99.135.
In commodities, gold fell 0.22% to $1,581.25 an ounce. Brent crude was flat at $57.31 a barrel and U.S. crude added 0.1% to $52.09.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group