Oil little changed, U.S. ties 18-year low after OPEC cuts demand forecast

NEW YORK (Reuters) – Oil prices were mixed on Thursday, as Brent crude rose modestly while U.S. futures ended unchanged at an 18-year-low after some European countries said they would relax coronavirus restrictions even though OPEC lowered its global oil demand forecast.

FILE PHOTO: A maze of crude oil pipes and valves is pictured during a tour by the Department of Energy at the Strategic Petroleum Reserve in Freeport, Texas, U.S. June 9, 2016. REUTERS/Richard Carson/File Photo

Brent futures LCOc1 gained 13 cents, or 0.5%, to settle at $27.82 a barrel, while U.S. West Texas Intermediate (WTI) crude CLc1 ended the day unchanged at $19.87, marking the second straight day at its lowest close since February 2002.

The crude market has not been able to sustain a rally since the Organization of the Petroleum Exporting Countries and allies, a group known as OPEC+, came to a deal at the weekend to drastically cut world supply.

However, traders said that because some countries in Europe are considering easing lockdowns, that could augur for a rebound in fuel demand. Officials at the World Health Organization warned countries to move with extreme caution before relaxing restrictions.

“Some of Europe is starting to open up. That’s supportive for Brent,” said John Kilduff, partner at hedge fund Again Capital LLC in New York.

In its latest monthly report, OPEC forecast that global oil demand would contract by 6.9 million barrels per day (bpd), or 6.9%, in 2020.

That forecast, along with Wednesday’s report that U.S. crude stockpiles rose by a record 19.2 million barrels last week tempered the optimism that grew out of the OPEC+ supply deal to reduce output by 9.7 million bpd for May and June..

Hoped-for cuts of another 10 million bpd from other countries, including the United States, could lower production by around 20 million bpd, although those cuts are expected to take months to come to fruition.

Following the end of trading, Saudi Arabia and Russia, in a joint statement, said they would continue to monitor oil markets and were ready to take joint measures with the rest of OPEC+ if needed.

“Oil prices must remain depressed to force shut-ins among non-cartelised producers,” said Norbert Ruecker, head of economics at Swiss bank Julius Baer, referring to producers such as the United States, where a lot of production is unprofitable at current prices.

ConocoPhillips (COP.N) said it would cut U.S. and Canadian oil production by around 225,000 bpd due to the collapse in crude prices.

In Russia, energy firms have already significantly reduced oil export plans for May following the OPEC+ deal, three company sources and two traders told Reuters.

Additional reporting by Shadia Nasralla in London, Roslan Khasawneh in Singapore and Aaron Sheldrick in Tokyo; Editing by Marguerita Choy and Elaine Hardcastle