Not surprisingly, oil futures ended lower on Monday, with the prices losing ground after a meeting of major crude producers, including Saudi Arabia and Russia, was tentatively shifted to Thursday, as tensions and finger-pointing between the world’s biggest oil producers over the weekend.
The OPEC and its allies, including Russia, will convene later this week in an attempt to forge a truce and stabilise oil prices by starting a process to try and cap production.
But it won’t work without a contribution from the US, which is impossible at the moment under US laws.
The meeting was originally scheduled Monday but was moved to Thursday, tentatively, to allow more talks on the possible shape of a deal to continue.
West Texas Intermediate crude for May deliver dropped $US2.26, or 8%, to settle at $26.08 a barrel in New York, after a 31.8% gain last week. the fall was trimmed to just under 7% in early Asian trading.
June Brent crude futures meantime, slipped $US1.06, or 3.1%, to $US33.05 a barrel in Europe. That was after last week’s 22% rise.
It is possible the Thursday meeting will go ahead and talks continue into Friday – it is equally possible there could be a further delay. Russia wants a US contribution, the Saudis don’t seem to be as strong on this point. Oil industry sources say the Saudis are continuing to load ships at a 12 to 14 million barrel a day rate.
The International Energy Agency says a cut of 10 to 15 million barrels a day won’t make much initial difference because the drop in demand from COVID-19 is will create a 15 million barrels a day surplus this quarter by itself. This is on top of the massive daily surplus that was growing before COVID-19 emerged in its terrible fashion.
