LONDON (Reuters) – Oil prices firmed on Tuesday after U.S. President Donald Trump and Russian counterpart Vladimir Putin agreed to talks on stabilising energy markets, with benchmarks climbing off 18-year lows, though the coronavirus-related demand hit capped gains.
Brent crude LCOc1 was up 7 cents at $22.83 a barrel by 1346 GMT after closing on Monday at $22.76, its lowest finish since November 2002. It hit a session high of $23.87.
U.S. crude Clc1 was up 52 cents at $20.61 after settling in the previous session at $20.09, its lowest since February 2002. It traded as high as $21.89 a barrel earlier in the session.
Oil markets have faced a double whammy from the coronavirus outbreak and a race to win market share between Saudi Arabia and Russia after OPEC and other producers failed this month to agree on deeper supply cuts to support oil prices.
Trump and Putin agreed in a phone call to have their top energy officials discuss stabilising oil markets, the Kremlin said on Monday.
Although the futures market is seeing a recovery, physical cargoes are selling in some regions at single digits, with sellers offering hefty discounts.
“The gap between physical assessments and futures reflects the differences between the realities on the ground and speculation about efforts to ease that pressure going forward,” JBC Energy said.
With a plunge in prices that has knocked about 60% off oil prices this year, a commissioner with the Texas state energy regulator renewed a call for restrictions on crude production because of a national supply glut.
In a sign of how well the market is supplied, the front-month Brent futures contract for May is trading at a discount of $13.95 a barrel to the November contract LCOc1-LCOc7, the widest contango spread ever seen.
A contango market implies traders expect oil to be higher in the future, encouraging them to store oil now to sell later.
Saudi Arabia, de facto leader of the Organization of the Petroleum Exporting Countries (OPEC), plans to boost its oil exports to 10.6 million barrels per day (bpd) from May on lower domestic consumption, a Saudi Energy Ministry official said.
Global oil refiners, meanwhile, have cut their throughput because of the slump in demand for transportation fuel, with European refineries reducing output by at least 1.3 million bpd, sources told Reuters.
Exxon Mobil Corp (XOM.N) closed a small crude distillation unit at its 502,500 bpd Baton Rouge refinery in Louisiana because of low demand, sources said.
The chief economist for global commodities trader Trafigura said that oil demand could fall in the coming weeks by as much as 30% from consumption at the end of last year.
A Reuters survey of 40 analysts forecast Brent crude prices LCOc1 would average $38.76 a barrel in 2020, 36% lower than the $60.63 forecast in a February survey.
Additional reporting by Jane Chung in Seoul and Sonali Paul in Melbourne; Editing by Edmund Blair and David Goodman