Breaking News
Investing Pro 0
Free Webinar - Crude Oil Trading 2023 | Thursday, February 9, 2023 | 01:00PM PST Enroll Now

Oil Ends Down Again, Stays In Bear Market Despite OPEC+ Meeting

Commodities Feb 04, 2020 04:21PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters.
 
NXGN
0.00%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
LCO
+1.74%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
CL
-0.11%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

By Barani Krishnan

By Barani Krishnan

Investing.com – OPEC+’s best efforts to calm the oil market amid the coronavirus crisis doesn’t seem to have worked.

Crude prices settled down again on Tuesday, remaining in a bear market and erasing gains from earlier in the day, as representatives of 23 oil-producing countries meeting in Vienna were unable to assuage investors that the fundamental picture for oil could be improved in the near-term with more supply cuts.

Both the Brent and WTI crude benchmarks rallied more than 1% in New York’s morning trade after the OPEC+ representatives meeting in Vienna reportedly discussed additional cuts of up to 1.0 million barrels per day to cope with lost demand from China’s coronavirus crisis.

But as the day progressed, investors became less optimistic of the group’s supply reduction targets and what that could achieve in a market that could lose even more barrels in China.

Brent, the London-traded benchmark for crude oil, settled down 34 cents, or 0.6%, at $53.96 per barrel. It also hit a new 13-month low at $53.87.

New York-traded West Texas Intermediate, U.S. crude benchmark, settled down 50 cents, or about 1%, at $49.61. WTI hit a 13-month low of $49.52 in intraday trade.

Year-to-date, Brent is down about 18% while WTI shows a loss of nearly 19%.

The U.K. benchmark was also 24% lower now than at its January peak of $71.75 a barrel, while its U.S. peer was at a 23% discount to last month’s high of $65.65. Any slide of 20% or more from a recent high technically defines a bear market.

Officials at Tuesday’s meeting in Vienna were considering additional cuts of 800,000-1.0 million bpd to help create a supply “shock” in the oil markets, the Wall Street Journal reported.

It said OPEC+ had initially thought of a 500,000 bpd reduction but doubled down on that number after realizing that it won't be enough to pull the market out of its current rut.

"If OPEC+ delivers anything less than an additional 1 million barrel per day cut, oil could fall further into bear market territory," said Edward Moya, analyst for OANDA in New York.

Tuesday’s rebound was also cut short by comments from Russian Energy Minister Alexander Novak, who said he wasn’t certain if it is time for OPEC+ to add to output curbs. Aside from the Saudis, the Russians are the second most important member of the oil-producing alliance.

The coronavirus crisis also presents a different challenge to OPEC. Unlike past sell-offs in oil where oversupply was always the problem, this crisis is more about demand or, rather, the lack of it.

Demand for oil from the world’s largest buyer China has suddenly collapsed — dropping by about three million barrels a day, or 20% of total consumption, according to Bloomberg estimates — and OPEC may not be able to cut its way out of that vacuum of buying.

“Those cuts won’t alleviate the lack of demand for lighter, sweeter barrels such as U.S. crude and Brent,” said Scott Shelton, energy futures broker at ICAP (LON:NXGN) in Durham, N.C. “Until the demand comes back, I don’t think the market is going to be able to balance itself without building a significant amount of crude.”

Oil Ends Down Again, Stays In Bear Market Despite OPEC+ Meeting
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.
  • Any comment you publish, together with your investing.com profile, will be public on investing.com and may be indexed and available through third party search engines, such as Google.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email