Oil prices dropped on Monday after Saudi Arabia and Russia delayed a meeting to discuss potential supply curbs, which could help to ease global oversupply as the COVID-19 pandemic destroys demand. The meeting was initially scheduled for Monday, but both countries decided to postpone it to April 9 after blaming each other for the failing OPEC+ talks in March.
As a result, Brent crude LCoc1 slipped by 24 cents (0.7%) to $33.87/barrel by 0639 GMT after closing to $30/barrel earlier on the trading day. Meanwhile, US WTI crude CLc1 lost 41 cents (1.5%) to $27.93/barrel, after hitting a session low of $25.28/barrel earlier.
Late last week, prices surged with the sharpest weekly increases ever, driven by hopes that OPEC and allies would reach a supply cut agreement. However, analysts said a new supply cut deal would be too late. The head of the International Energy Agency said that even with a 10 million bpp supply cuts, global inventories would still rise by 15 million bpd in Q2.
The oil price crash has forced producers to slash their capital spending, including for new drilling. In the US, rig counts fell by 62 last week, marking the most significant weekly drop in five years, Baker Hughes’ data showed. Citi analysts expect onshore US rigs to tumble by 425 to 360 rigs by Q4.
