On Tuesday, oil prices fell sharply due to the surging crude stockpiles and weak demand for fuel affected by the coronavirus pandemic. Market players were also cautious over the upcoming output cuts arrangements between the world’s biggest producers.
Brent crude oil futures lost 3.6% yesterday, or USD1.18 to settle at USD31.87/barrel while the US WTI posted a plunge of 9.4% or USD2.45 to settle at USD23.63/barrel.
In the week ended April 3, the US crude stocks soared by 11.9 million barrels to 473.8 million barrels, according to the American Petroleum Institute (API). Analysts only expected a build of 9.3 million barrels.
The US Energy Information Administration (EIA) estimated the country’s motor gasoline demand to hit the lowest levels in two decades in the second quarter of this year.
Meanwhile, the world’s biggest oil producers, Saudi Arabia and Russia will meet on Thursday to address output cuts. However, according to some sources, some energy ministers have said that they will only proceed with the cuts if the US joins in with its own cuts.
OPEC sources said that the final OPEC+ cuts would depend on volumes that other major producers outside the group are willing to cut.
However, US President Donald Trump said that OPEC has not urged the US to cut output to balance prices. He also said that the country’s output was already down due to the slumping prices.
According to the EIA, US crude output is likely to fall by 470,000 bpd this year.
Analyst Gene McGillian of Tradition Energy said that the market needs some more certainty on whether Saudi and Russia will actually close the deal to cut output.
