Covid-19: Trump to meet oil executives over falling prices, price war

Covid-19: Trump to meet oil executives over falling prices, price war

This time around, as the combination of the coronavirus pandemic and Saudi Arabia's price war with Russian Federation creates a record-breaking oversupply, its role may be more limited.

On Wednesday, the 1st of April 2020, both USA and United Kingdom crude futures' prices pummelled following a record surge of U.S. crude inventories last week, while the petroleum demands had faced off its steepest weekly plunge on record. Brent crude for June settlement fell 3.6% to $25.40 after dropping 7 cents in the previous session.

An output agreement between the USA and OPEC+ including Canada would be hard to reach, but signs of policy discussions are multiplying and an outcome should no longer be dismissed, according to Goldman.

Moreover, Saudi Arabia and Russian Federation failed to reach a deal on oil production cuts at the March meeting, triggering an oil price war, with Riyadh vowing to flood the market with oil and reportedly starting offering barrels to European customers at huge discounts.

The market is grappling with a bumper oversupply, while demand is set to fall by as much as 30 million barrels a day in April, according to an executive at the world's largest independent oil trader. USA crude stockpiles rose 13.8 million barrels in their biggest weekly increase since 2016.

Attention will focus on US government figures due on Wednesday to confirm the API figures.

However Russia's opposition to a proposal to deepen oil provide cuts by OPEC and different allies, a gaggle often known as OPEC+, at a gathering in early March sparked the turmoil, the source mentioned.

Low crude prices makes many drilling operations in the USA unsustainable, and in response companies have announced thousands of layoffs and furloughs.

In response to Russia's rejection of deeper oil cuts, Saudi Arabia slashed its export costs and mentioned it might increase manufacturing to most capability.

The dominion is flooding the market and has tried to promote low-priced oil to refiners that purchase Russian crude.

"Diplomacy won't be able to help the physical oil market nor oil prices in the short term", Tonhaugen of Rystad said.

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