* Saudi, UAE will add 3.6 mln bpd to oversupplied market
* Russia's Novak questions Saudi decision
* OPEC and EIA cut global oil demand forecast
* EIA says U.S. inventories rose 7.7 mln bbls in most recent week (Updates with settlement prices, recasts at top)
By David Gaffen
NEW YORK, March 11 (Reuters) - Oil prices fell 4% on Wednesday, sinking into the close of trading with renewed weakness in the stock market after the World Health Organization said the global coronavirus outbreak is now a pandemic, and as major oil producers announced plans to escalate the burgeoning price war.
Brent crude LCOc1 settled down $1.43, or 3.8%, at $35.79 per barrel, while U.S. West Texas Intermediate (WTI) crude CLc1 ended down $1.38 or 4% to $32.98.
Risk assets tumbled throughout the day, but accelerated losses late as the number of coronavirus cases increased and numerous countries restricted travel. caused the dump in oil prices in the last minutes before the oil market close was when the stock market made new lows," said Phil Flynn, analyst at Price Futures Group in Chicago. "News on the coronavirus does not seem to be inspiring demand hopes right now."
Both the Organization of the Petroleum Exporting Countries and the U.S. Energy Information Administration (EIA) slashed oil demand forecasts because of the coronavirus outbreak, as they now see demand contracting in this quarter.
Saudi Arabia and the United Arab Emirates announced plans to boost production capacity following the collapse of coordinated output cuts by Saudi Arabia, Russia and others. The Saudi energy ministry has directed producer Saudi Aramco 2222.SE to raise its output capacity to 13 million from 12 million barrels per day (bpd). national oil company ADNOC also said it would raise crude supply to more than 4 million bpd in April and accelerate plans to boost its output capacity to 5 million bpd, a target it previously planned to achieve by 2030. shock-and-awe strategy suggests to us that to bring Russia back to the negotiating table, it is serious in causing severe price and revenue pain for all oil producers," UBS analysts said in a note.
Trading in long-dated Brent futures contracts points to expectations that supply will continue to rise. The current Brent front month contract recently traded at more than $5 below the six-month contract LCOc1-LCOc6 , the biggest discount since January 2016.
Russian Energy Minister Alexander Novak said Saudi Arabia's plans to increase production capacity were "probably not the best option", adding Moscow had several phone calls with OPEC and non-OPEC members, but that no partners had agreed to its proposal. said in a monthly report that it expected global demand to rise by just 60,000 bpd in 2020, a reduction of 920,000 bpd from its previous forecast. U.S. Energy Information Administration (EIA) also said global oil demand is expected to dive by 910,000 bpd in the first quarter due to coronavirus outbreak. North American producers have announced spending cuts including Occidental Petroleum Corp (NYSE:OXY) OXY.N , Marathon Oil Corp (NYSE:MRO) MRO.N and Diamondback Energy Inc FANG.O . reduction in spending and drilling will take time to show up in actual production figures and is unlikely to mitigate the bearish impact of a massive Saudi output increase, in case the latter does happen," oil brokerage PVM's Tamas Varga said.
Weekly data on U.S. inventories showed little effect from the coronavirus outbreak. Crude stocks rose by 7.7 million barrels, but inventories of gasoline and diesel fell sharply, as refining runs remain at seasonally low levels. EIA/S
Policymakers and central banks have been taking measures to bolster their economies against disruption caused by the coronavirus outbreak, the latest being the Bank of England which unexpectedly cut interest rates by half a percentage point on Wednesday. worker at Equinor's EQNR.OL Martin Linge offshore oil and gas development has been diagnosed with the coronavirus and is being held in isolation, the Norwegian energy firm said. It said activity on the field will be reduced on Wednesday. China's independent oil refiners are cranking up production as local governments begin to relax strict measures to contain the coronavirus and fuel demand begins to recover. GRAPHIC-Oil price forecasts dim after price war begins png
https://tmsnrt.rs/2W15ejG GRAPHIC-Oil price dive turns up the heat on OPEC finances png
https://tmsnrt.rs/2IulvWo
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