Oil stable as market eyes ongoing supply cuts amid downturn

Front-month Brent crude futures, the international benchmark for oil prices, were at $62.36 at 0023 GMT, 7 cents, or 0.1%, above Friday’s close.

U.S. West Texas Intermediate (WTI) crude futures were at $53.42 per barrel, 16 cents, or 0.3%, above their last settlement.

Prices fell by around 1% in the previous session and crude futures are down by some 20% from their 2019 peaks in late April, dragged lower by a widespread economic downturn that has started to impact oil consumption.

Russia on Monday said it might support an extension of supply cuts that have been in place since January, warning oil prices could fall as low as $30 per barrel if producers supply too much crude.

The Organization of the Petroleum Exporting Countries (OPEC) and some non-affiliated producers including Russia, known collectively as OPEC+, have withheld supplies since the start of the year to prop up prices.

OPEC+ is due to meet in late June or early July to decide output policy for the rest of the year.

“Due to the general fear of an economic downturn … (and) the realization that demand growth is slowing … no one will argue for abandoning (the) OPEC+ accord,” said Fereidun Fesharaki, chairman of energy consultancy FGE, in a note published on Tuesday.

FGE said global crude oil demand growth could drop below 1 million barrels per day (bpd) in 2019, down from previous expectations of 1.3 to 1.4 million bpd.

“This effectively gives us an extra 300,000-400,000 barrels per day of supply,” said Fesharaki.