Oil headed for a fifth weekly loss as demand concerns grow in Asia and Europe, while OPEC+ awaited Russia’s response to its proposal to cut output further.
Chinese refiners are processing 15% less crude than before the coronavirus outbreak, said people with knowledge of operations at the nation’s largest complexes. In Europe, French industrial production missed estimates, compounding a reduced demand outlook. Traders were also watching a meeting in Cairo over the weekend for signs of progress between warring factions in Libya, where oil exports are currently blockaded.
With oil majors including Total SA and BP Plc projecting a significant hit to global oil demand this year due to the virus, the oil market’s structure has nosedived into a bearish contango. That weakness eased from it’s softest settle in 13 months on Friday as the Organization of Petroleum Exporting Countries and its allies await Russia’s response to a proposal for an additional 600,000 barrels a day of output curbs.
“There is still plenty of uncertainty around the global balance, with it unknown how demand will evolve in coming months as a result of the coronavirus.”
Brent rose 9 cents, or 0.2%, to $55.02 a barrel on the London-based ICE Futures Europe exchange as of 10:06 a.m. in London. The contract is down about 5% this week, set for the longest streak of weekly drops since November 2018. West Texas Intermediate was little changed, at $50.96.
Both state-owned and private refineries in China have scaled back processing by at least 2 million barrels a day over the past week, said people with knowledge of operations at the nation’s largest complexes. So-called throughput could fall further as demand for aviation and transportation fuels continues to shrink as entire cities remain locked down and travel is restricted.