On Friday, crude oil futures fell after posting the biggest one-day gains on Thursday as US President Donald Trump stated he had brokered an output cut deal between Saudi Arabia and Russia but he himself made no sign to decrease US production.
Brent crude oil futures slumped b 3% or 9 cents to USD29.05/barrel at 01.27 GMT while US WTI futures plunged by 5.2% or USD1.32 to USD23.98/barrel. On the previous day, Brent soared by 21% and WTI jumped by 24.%.
Trump said that on Thursday, he had spoken with Saudi Crown Prince Mohammed bin Salman and Russian President Vladimir Putin and expected them to cut oil production by as much as 10-15 million bpd.
Market players are showing skepticism on the output cut deal as the US had made no offer to cut US output. The deal would less likely to process if there is no cooperation from other producers, including the US.
Royal Bank of Canada noted that the biggest hurdle to an agreement would be that Riyadh and Moscow did not see any participation from US producers.
Even if the two major producers agree to cut production by as much as 15 million bpd, some analysts argued that it would not be sufficient to balance the market ahead of a deep economic recession.
Rystad Energy estimated the global market to face a massive oversupply of about 25 million bpd. Cutting at least 10 million bpd would in the least ease the shortage of crude storage capacity and the deal between Saudi and Russia could provide a floor for WTI in the USD30s.
