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Oil prices decline $3 a barrel as market remains uncertain on supply outlook

CommoditiesApr 05, 2020 06:55PM ET
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© Reuters. FILE PHOTO: The sun is seen behind a crude oil pump jack in the Permian Basin in Loving County

By Jessica Resnick-Ault

NEW YORK (Reuters) - Global benchmark oil prices traded as much as $3 a barrel lower as the market opened for Monday's trading session, reflecting fears of oversupply after Saudi Arabia and Russia postponed to Thursday a meeting about a potential pact to cut production.

Late last week, prices had surged, with both U.S. and Brent contracts posting their largest weekly percentage gains on record due to hopes that OPEC and its allies would strike a global deal to cut crude supply worldwide.

The COVID-19 pandemic caused by the novel coronavirus has cut demand and a month-long price war between Saudi Arabia and Russia has left the market awash in crude. During the month, prices have plummeted as the market has waited for a plan to cut production from OPEC and its allies.

Over the weekend, Saudi Arabia sent a signal that a production cut deal may be ahead, potentially muting the price decline. U.S. President Donald Trump said he will put pressure on Saudi Arabia and its allies for such a deal.

"I don't know that anyone is going to get too aggressively short before the meeting," said Robert McNally, president of Rapidan Energy Group in Bethesda, Maryland.

Brent crude (LCOc1) traded lower by $2.39 a barrel, or 7%, by 6:16 p.m. EDT (10:16 GMT) after earlier touching a session low of $30.03 a barrel.

U.S. crude (CLc1) traded down $2.41 a barrel, or 8.5%, at $25.93 a barrel.

Saudi Arabia's decision to postpone its posting of the international prices for its crude for the first time indicates that it is not eager to flood the market with low-priced crude before a potential agreement. "That's a pretty clear sign that they are open to cutting production in May," McNally said. The kingdom delayed the release until Friday to wait for the outcome of the meeting between OPEC and its allies regarding possible output cuts, a Saudi source told Reuters.

Trump said on Saturday that he will put tariffs on Saudi and Russian production, potentially accelerating an output cutback.

OPEC and its allies postponed an emergency meeting scheduled for Monday, led by Saudi Arabia, where the oil cuts could be agreed upon. A senior Saudi source told Reuters on Sunday that the kingdom would now host the meeting via videoconference on Thursday and the delay was to allow more time to bring other producers on board.

Russian President Vladimir Putin put the blame for the crash in prices on Saudi Arabia on Friday - prompting a response from Riyadh the following day disputing Putin's assertions.

OPEC and its allies are working on a global agreement for an unprecedented oil production cut equivalent to around 10% of worldwide supply in what they expect to be a global effort including countries that do not exert state control over output, such as the United States.

Trump has, however, made no commitment to take the extraordinary step of persuading U.S. companies to cut output.

Per Magnus Nysveen, head of analysis at Rystad Energy, said the decline in global demand because of the coronavirus pandemic and the global lockdowns was larger than the proposed cuts by the OPEC+ alliance.

"It is not strange for the market to hike prices by enthusiasm such as Friday's, but for the levels to stay stable for more than a day or two, it takes concrete developments and deals on the ground," he said.

Oil prices decline $3 a barrel as market remains uncertain on supply outlook
 

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Comments (20)
Andy Ho
Andy Ho Apr 05, 2020 10:54PM ET
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oil going up the whole day?
Jo Joe
Jo Joe Apr 05, 2020 8:05PM ET
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Covid19 positive rate per test.. France 41.4%, Spain 37.1%, America 19.1%, S Korea 2.2%, Australia 1.9%.. means there is so many people in society in Europe, America.. means demand collapse will get back far future.
TeaMaker Tex
TeaMaker Tex Apr 05, 2020 7:30PM ET
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G20 oil reps are putting big deal together for thursday.
gary leibowitz
gary leibowitz Apr 05, 2020 7:00PM ET
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Loved the CDC alert along with ever official on this planet to NOT USE MASKS!  Oh the dangers far out weigh the risk. NOW that the supply chain has finally made all purchase exclusively to hospital, health care officials they once again tell you to use them. but wait there is no N95 supply so they start out telling you to use anything home made.  Once the supply is there they will change their official stand on using N95 Masks. Gullibility is our first and last name.  Our middle name is TRUMP.
Chris Martin
Chris Martin Apr 05, 2020 7:00PM ET
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Do ya' like the way the commies gave and will continue to give capitalism precedence and that any country is FULL od people that should like this except elitists and communists -
gary leibowitz
gary leibowitz Apr 05, 2020 6:57PM ET
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The stable genius already figured it out. he put the fear of god to them.  He will capture lightning and eradicate the virus and produce raw energy for our consumption.  His re-election is assured!  Glory be thy name.
Chris Martin
Chris Martin Apr 05, 2020 6:57PM ET
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Get your "wits" about you man ...
Andy Ho
Andy Ho Apr 05, 2020 6:53PM ET
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will there be any fall soon? looks like climbing up now.
sholey Thakur
sholey Thakur Apr 05, 2020 6:32PM ET
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Big US Tariff on oil before day starts
Chris Martin
Chris Martin Apr 05, 2020 6:32PM ET
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I like surprises. Didn't think of that ! Thanx for thought -
sholey Thakur
sholey Thakur Apr 05, 2020 6:32PM ET
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US import tarrif soon.
Danh Thao
Danh Thao Apr 05, 2020 6:26PM ET
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I think we should sell. There is no OPEC agreement.
Imran Haroon
Imran Haroon Apr 05, 2020 5:56PM ET
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means wti again $20
Tony Törnqvist
Tony Törnqvist Apr 05, 2020 5:54PM ET
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lets see if Trump can help the American ppl by giving them higher oil prices
Chris Martin
Chris Martin Apr 05, 2020 5:54PM ET
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I got a big bag of "Hope" right here Tony - hope you mean it -
Jedrek Zak
Jedrek Zak Apr 05, 2020 5:49PM ET
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let's try this again. Tariffs will do almost nothing because we import only 1 million barrels per day from Russia and Saudi Arabia combined. That's 12% of imports. Whereas we import 3.41 mbd from Canada! That's 37.4% of imports. EIA numbers.
Chris Martin
Chris Martin Apr 05, 2020 5:49PM ET
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Then, no sweat You just grabbed us about 12% soo, take it as a start ??? yes...
Jedrek Zak
Jedrek Zak Apr 05, 2020 5:43PM ET
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Thanks for not posting my post with real information in it, incesting.com!
Chris Martin
Chris Martin Apr 05, 2020 5:43PM ET
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It IS hard to take, when you write for 15 minutes ro be wasted because of an un-related symbol or word taken out of context. It helps us to be nice -
Richie Berg
Richie Berg Apr 05, 2020 5:38PM ET
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US is a net exporter of oil. How can oil tariffs help, exports?
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Chris Martin
Chris Martin Apr 05, 2020 5:38PM ET
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next step is not import any...
Juho Peltola
Juho Peltola Apr 05, 2020 5:38PM ET
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Shale is energy negative, not possible whitout exports.
Tony Ab
Tony Ab Apr 05, 2020 5:38PM ET
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Here is an idea . Withdraw military help from Saudis ( let their weakling military deal with Iranian threat ) And slap more sanction on Russia . Clamp down harder on Iran , and freeze all Venezuelan assets . Im sure that will get their attention
Chris Martin
Chris Martin Apr 05, 2020 5:38PM ET
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Look at my previous posts te: this. I say advertise it! Tell them and Iran the same day exactly when, for how long and why we'll a have no protection for Saudis, different countries. They should be able to repel any visitors similar to, let's say, Russia since they're willing to annex an area/country/ landmass with the previous administration doing NOTHING! They never DID anything ro help us. More like, GIVE IT AWAY! It's OK
Chris Martin
Chris Martin Apr 05, 2020 5:38PM ET
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wrong. Time of process is what's not predictable so storage process just went up. Send anything anywhere to beat our marketing, purchasing power is not to be ignored-
Chris Martin
Chris Martin Apr 05, 2020 5:35PM ET
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Trump is great !!!Tarrif Man... to the rescue.
Kaan Shram
Kaan Shram Apr 05, 2020 5:27PM ET
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However here is more interested side are Shelf Producers,there are under pressure and in a line of disappearing
Chris Martin
Chris Martin Apr 05, 2020 5:27PM ET
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well this should help them
Ngoc Nguyen
Ngoc Nguyen Apr 05, 2020 4:52PM ET
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trump voluntarily put tariffs on russia and saudi? hahahahaha
Chris Martin
Chris Martin Apr 05, 2020 4:52PM ET
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that's right, we have enuf oil to last us and mor away knowing as much hence, you guy deal with it.
John Larch
John Larch Apr 05, 2020 4:07PM ET
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If shale oil producers don't cut production, there will be no cuts at all. If they do, they are at danger of disappearing anyway.
Jedrek Zak
Jedrek Zak Apr 05, 2020 4:07PM ET
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yup. cut go bankrupt. don't cut go bankrupt. win win
Chris Martin
Chris Martin Apr 05, 2020 4:07PM ET
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Gotta cap some, pay some employees - some will go but soon will consolidate. The games will go on !
Sia BangWen
Sia BangWen Apr 05, 2020 3:55PM ET
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tariff only work for Canada Lmao
Ollie North
Ollie North Apr 05, 2020 3:55PM ET
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Tariffs are nothing but pie in the sky......... and demand destruction is so great that the proposed cuts will make little or no difference.  Oil is headed back to $ 20 or below within weeks, even if there is a deal with OPEC Nations.   The real issue is that the virus is not letting up and no one is driving to work or school and no jets are flying internationally.  It's the perfect storm, even without OPEC squabbling.
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Chris Martin
Chris Martin Apr 05, 2020 3:55PM ET
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Danh Thao change your handle to "knowing little"
Chris Martin
Chris Martin Apr 05, 2020 3:55PM ET
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For you to take a good man's name? Rather satanic of you.
Danh Thao
Danh Thao Apr 05, 2020 3:55PM ET
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Chris Martin : i am Vietnamese. I'm not chinese
Ludovic Raymond
Ludovic Raymond Apr 05, 2020 3:55PM ET
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Is there anything you do in life besides insulting anyone who doesnt share your views. We got it everything and everyone is either Marxist, communist or sociliast
Ludovic Raymond
Ludovic Raymond Apr 05, 2020 3:55PM ET
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Ludovic Raymond to Chris Martin
 
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