Oil prices slumped on Thursday, giving back an earlier 10% surge as investors reacted negatively to the emerging supply-cut agreement between members of OPEC and its allies in response to the global fuel demand collapse due to the coronavirus pandemic.
Oil producers led by Saudi Arabia and Russia tried to hammer out an agreement that would address growing oversupply amid a 30% drop in worldwide fuel demand. However, analysts said that the production group may end up cutting less than the market hoped, adding that the demand destruction from the pandemic-induced recession was too great a problem to tackle easily.
The Organization of Petroleum Exporting Countries and its allies including Russia, a group known as OPEC+, had bandied about curbs of 15 million to 20 million barrels per day (bpd), or 15% to 20% of global supplies.
However, Iran’s oil minister said a production cut of 10 million bpd is just for May and June 2020. From July until the end of 2020 there will be a production cut of 8 million bpd, and starting January 2021, there will be a 6 million bpd cut.
U.S. futures CLc1 settled down $2.33, or 9.3%, to $22.76 a barrel while Brent LCOc1 closed $1.36, or 4.1%, lower at $31.48 a barrel.
Source : Reuters