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Oil gains as hopes rise for production cut amid coronavirus outbreak

Published 07/04/2020, 01:47
Updated 07/04/2020, 01:48

TOKYO, April 7 (Reuters) - Oil rose on Tuesday amid hopes
that the world's biggest producers of crude will agree to
curtail production as the coronavirus pandemic ravages the
global economy, even as analysts cautioned the cuts may do
little to boost demand.
Brent crude LCOc1 was up by 73 cents, or 2.2%, at $33.78 a
barrel by 0026 GMT after falling more than 3% on Monday. U.S.
crude was up by 97 cents, or 3.7%, at $27.05 a barrel, having
dropped nearly 8% in the previous session.
The world's main oil producers including Saudi Arabia and
Russia are likely to agree to cut output at a meeting on
Thursday, although that would also depend on the United States
doing its share, sources told Reuters. But the threat of a major recession hangs over the market
due to the halt of much economic activity as a result of the
coronavirus pandemic, with half the global population under some
form of lockdown or social distancing measures. "Despite the prospect of a massive Saudi Arabian-led
production cut, the price of oil has remained low in recent
weeks amid a coronavirus-related collapse in demand," Capital
Economics said in a note.
"We expect energy prices to hover around current levels
until economic activity recovers," it said.
Oil prices slumped on Monday after Saudi Arabia and Russia
delayed a meeting to agree on output cuts till Thursday.
Analysts estimate there is a supply overhang that equates to
about a quarter of global consumption before the coronavirus
outbreak.
A global recession that economists in a Reuters poll say is
under way will likely be more serious than expected a few weeks
ago due to the viral outbreak, the latest polling showed.

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