Oil prices extend rebound on output cuts, still set to end tumultuous week in the red

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FILE PHOTO: Crude oil storage tanks are seen in an aerial photograph at the Cushing oil hub in Cushing, Oklahoma, U.S. April 21, 2020. REUTERS/Drone Base/File Photo

TOKYO (Reuters) – Oil prices rose on Friday, gaining further ground as some producers like Kuwait said they would move to cut output swiftly to try to counter the evaporation in global demand for fuels caused by the coronavirus pandemic.

Brent crude LCOc1 was up 60 cents, or 2.8%, at $21.93 by 0133 GMT, having climbed 5% on Thursday. U.S. oil CLc1 gained 66 cents, or 4%, at $17.16 a barrel, after surging 20% in the previous session.

But barring a sharper jump on the last trading day of the week, prices are heading for their eighth weekly loss in the last nine – one of the most tumultuous weeks in the history of oil trading, with U.S. West Texas Intermediate falling into negative territory to minus $37.63 a barrel on Monday, while Brent thudded to a two-decade low.

“The disruption relating to the coronavirus is set to cause the steepest fall in global GDP since the Second World War,” Capital Economics said in a note, forecasting a 5.5% contraction in global economies this year, dwarfing the 0.5% fall seen during the global financial crisis.

“Once the virus is under control output should rebound, but it will take years to return to its pre-virus path,” it said.

Under a deal agreed between the Organization of the Petroleum Exporting Counties (OPEC) and associated producers like Russia, a grouping known as OPEC+, production cuts equal to 9.7 million barrels of oil per day are due to kick in from May.

But Kuwait’s state news agency KUNA said on Thursday the producer will begin cutting supplies to international markets without waiting for the official start of the OPEC+ deal.

Meanwhile Azerbaijan’s Azeri-Chirag-Guneshli oil project will have to cut output sharply from May onwards as the oil producer fulfils its commitments under the deal to cut production, four sources told Reuters.

Reporting by Aaron Sheldrick; Editing by Kenneth Maxwell

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