Data released over the weekend by China, the world’s top energy consumer, dragged on oil prices earlier in the session. Factory activity in the country shrank at the fastest pace ever in February, underscoring the colossal damage from the coronavirus outbreak on its economy. However, several key members of the Organization of the Petroleum Exporting Countries (OPEC) are mulling an additional production cut in the second quarter, with fears the virus outbreak will erode oil demand. The previous proposal was for an additional output cut of 600,000 bpd. Russian Energy Minister Alexander Novak said on Monday that Moscow is evaluating the smaller oil production cut proposal made by OPEC+, adding it had not received a proposal for deeper cuts.

OPEC oil output fell in February to the lowest in over a decade as Libyan supply collapsed due to a blockade of ports and oilfields and Saudi Arabia and other Gulf members overdelivered on a new production-limiting accord, a Reuters survey found. Oil prices have fallen more than 20% since the start of the year despite OPEC and its allies including Russia, a grouping known as OPEC+, curbing oil output by 1.7 million bpd under a deal that runs to the end of March. “Inaction by OPEC+ would likely trigger another potentially severe bout of selling,” analysts at Fitch Solutions have said. They said that although current prices would incentivize Russia to agree to further output cuts, they would likely be of a short duration, for example, three months, with the barrels brought immediately back to market thereafter.

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