Australian petrol prices are heading lower in coming weeks after global oil prices suffered their biggest one day fall since the depth’s of the great crash in late 2014.
The fall will come despite a big rise in Sydney on the weekend from $1.22 cents on Friday a litre to $1.66 cents a litre the day after.
While the weaker Aussie dollar has been holding up Australian petrol prices, last week’s slide was greater than the movement in the currency which ended above 66 US cents on Saturday morning for a weekly rise of more than 1.5%.
The driver of the price slump was the collapse of the mooted deal between OPEC and its allies, led by Russia, to impose further production cuts to try and support the price.
West Texas Intermediate crude for April delivery in New York slumped $US4.62, or 10.1%, to end at $US41.28 a barrel, marking its biggest daily decline since November 28, 2014, according to FactSet data.
In Europe May Brent crude slid $US4.72, or 9.4%, to end at $US45.7 a barrel, its lowest settlement since June 22, 2017.
For the week WTI crude lost 7.8%, while Brent crude ended down 8.9%, according to FactSet data.
Russia revealed on Friday that it had refused to agree to a Saudi Arabia-led plan for additional crude production cuts or between 600,000 and 1 million barrels a day for the second quarter at least.
“The OPEC+ alliance has finally run its course (at least for now) with Russian energy minister [Alexander] Novak saying producers are free to produce at will from April 1,” Marshall Steeves, energy markets analyst at IHS Markit, told MarketWatch.com. The current OPEC+ agreement expires at the end of March, so the pressure will be on to extend that deal.
Following the talks on Friday, OPEC+ sources they would continue consultations to stabilise the oil market, but made no comment on production cuts,
Analysts reckon that Russian, which needs the revenue, is reluctant to trim output by more (The country is facing elections later in the year) that the present cap of around 1.2 million barrels a day.
American analysts though claim the Russians are also trying to squeeze US shale producers.
Share prices of shale oil and gas groups are under growing pressure and even integrated majors such as Exxon and Chevron are cutting back.
Shares in two shale oil drillers, Devon Energy and Chesapeake Energy are down 48% and 73% respectively, while Exxon Mobil shares ghave fallen 31% and shares in Chevron are down 21%.
