Oil pared losses amid signs that Saudi Arabia and Russia are making progress toward an agreement to curb crude output as the coronavirus wreaks havoc on the global economy.
Futures fell 3.7 per cent in New York, having earlier plunged as much as 11 per cent. Large oil-producing nations are racing to negotiate a deal to stem the price crash, but hurdles remain. A meeting of OPEC+ and others – already delayed once – is tentatively scheduled for Thursday. Russia and Saudi Arabia want the U.S. to join in, and America’s energy secretary said he expects a meeting of his G-20 counterparts this week.
"The fact that the OPEC+ alliance agreed to return to the negotiating table marks an important breakthrough,” said Stephen Brennock, an analyst at PVM Oil Associates. Nevertheless, the supply curbs being discussed “would fall short of the current loss in demand” and "would not prevent a further upswing in bloated global oil inventories.”
As crude futures fluctuate, the market for real barrels shows renewed weakness, trading several dollars below headline prices. Sellers from Russia to Congo are slashing pricesin an effort tosell cargoes. At the same time, gasoline -- a premium product in normal times -- is currently unprofitable in Europe and barely profitable in America.
- West Texas Intermediate for May declined 3.7 per cent to $27.28 a barrel as of 8:28 a.m. New York time
- Brent for June fell 2.8 per cent to $33.15 a barrel
Riyadh and Moscow are “very close” to an agreement on cuts, CNBC reported Monday, citing the head of Russia’s sovereign wealth fund. Still, a lack of participation from the U.S. – the world’s largest producer – could prove to be a stumbling block. Despite originally calling for a deal, Trump on Saturday described OPEC as a cartel and threatened tariffs on foreign oil.
Meanwhile, Saudi Aramco hasdelayedthe release of its closely watched monthly oil-pricing list until Thursday to await the outcome of OPEC+ negotiations, according to people with knowledge of the situation. The U.A.E. signaled the same move on Monday, while also indicating that it had sharply increased production so far this month.
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