Saudi, Russia outline record oil cut under U.S. pressure as demand crashes


DUBAI/MOSCOW/LONDON (Reuters) – OPEC, Russia and other allies outlined plans on Thursday to cut their oil output by more than a fifth and said they expected the United States and other producers to join in their effort to prop up prices hammered by the coronavirus crisis.

But the group, known as OPEC+, failed to secure a final agreement, which OPEC sources said would depend on Mexico joining in after it balked at the production cuts it was asked to make. Discussions among top global energy ministers will resume on Friday.

The planned output curbs by OPEC+ amount to 10 million barrels per day (bpd) or 10% of global supplies, with another 5 million bpd expected to come from other nations to help deal with the deepest oil crisis in decades.

Global fuel demand has plunged by around 30 million bpd, or 30% of global supplies, as steps to fight the virus have grounded planes, cut vehicle usage and curbed economic activity.

An unprecedented 15 million bpd cut still won’t remove enough crude to stop the world’s storage facilities quickly filling up. And far from signalling any readiness to offer support, U.S. President Donald Trump has threatened Saudi Arabia if it did not fix the oil market’s problem of oversupply.

Trump, who has said U.S. output was already falling due to low prices, warned Riyadh it could face sanctions and tariffs on its oil if it did not cut enough to help the U.S. oil industry, whose higher costs have left it struggling with low prices.

A White House aide said Trump held a call with Russian President Vladimir Putin and King Salman of Saudi Arabia about the talks, after a U.S. official said the OPEC+ move towards cuts sent an “important signal” to the market.

Officials from the Organization of the Petroleum Exporting Countries and Russia have said the scale of the crisis required involvement of all producers.

“We are expecting other producers outside the OPEC+ club to join the measures, which might happen tomorrow during G20,” the head of Russia’s wealth fund and one of Moscow’s top oil negotiators, Kirill Dmitriev, told Reuters.

Thursday’s OPEC+ talks will be followed by a call on Friday between energy ministers from the Group of 20 (G20) major economies, hosted by Saudi Arabia.

OPEC and Russian sources said they expected other producers to add 5 million bpd to cuts, although an OPEC+ statement on Thursday made no mention of any such condition.

Brent oil prices, which hit an 18-year low last month, were trading around $32 a barrel on Thursday, half their level at the end of 2019.

U.S. DILEMMA

OPEC+ would cut output by 10 million bpd in May to June, OPEC+ documents showed. All members would reduce output by 23%, with Saudi Arabia and Russia each cutting 2.5 million bpd and Iraq cutting over 1 million bpd.

Under the plans, OPEC+ would then ease cuts to 8 million bpd from July to December and relax them further to 6 million bpd from January 2021 to April 2022, the documents showed.

The United States, whose output has surged to surpass Saudi and Russian production, was invited to Thursday’s OPEC+ talks but it was not clear if it had joined the video conference. Brazil, Norway and Canada were also invited.

U.S. officials have already said U.S. output would fall naturally over two years but have not committed to any cuts.

In a sign OPEC+ was struggling to win broader support, Canada’s main oil province of Alberta said output had already dropped and that it had not been asked by OPEC for more cuts. The province said it backed a U.S. idea for tariffs on imported crude.

Before the talks, Moscow and Riyadh had been at odds over what level of production to use to calculate reductions, after Saudi Arabia hiked its supply in April to a record 12.3 million bpd, up from below 10 million bpd in March. Russian output, meanwhile, has been running about 11.3 million bpd.

The two nations fell out during an acrimonious meeting in Vienna in March, when a previous production deal collapsed.

FILE PHOTO: The sun sets behind a crude oil pump jack on a drill pad in the Permian Basin in Loving County, Texas, U.S. November 24, 2019. REUTERS/Angus Mordant/File Photo

The two sides agreed on Thursday that cuts would be made from an 11 million bpd baseline for both countries, OPEC+ documents showed.

“We have managed to overcome differences. It will be a very important deal. It will allow the oil market to start on a path to recovery,” said Dmitriev, who last month was the first official to propose a deal involving members other than OPEC+.

Several U.S. states could order private companies to limit production under rarely used powers. The oil regulator in Texas, the largest producer among U.S. states with output of about 5 million bpd, meets on April 14 to discuss possible curbs.

Additional reporting by Alex Lawler, Shadia Nasralla, Vladimir Soldatkin, Sonali Paul; Writing by Dmitry Zhdannikov; Editing by Jason Neely and Edmund Blair



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U.S. railroads push against oil industry demands for storage in rail cars By Reuters


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© Reuters. FILE PHOTO: Unused oil tank cars are pictured on Western New York & Pennsylvania Railroad tracks outside Hindsdale, New York

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By Devika Krishna Kumar and Laura Sanicola

NEW YORK (Reuters) – Railroads are clamping down on rising demand from oil companies to store crude in rail cars due to safety concerns, sources said, even as the number of places available to stockpile oil is rapidly dwindling.

Oil demand is expected to drop by roughly 30% this month worldwide due to the worsening coronavirus pandemic, and supplies are increasing even as Saudi Arabia and Russia hammer out an agreement to cut worldwide output. Storage is filling rapidly as refiners reduce processing and U.S. exports fall.

Globally, storage space for crude could run out by mid-2020, according to IHS Markit, and most U.S. onshore storage capacity is expected to fill by May, traders and analysts said.

However, railroads including Union Pacific (NYSE:) and BNSF, owned by billionaire Warren Buffett, are telling oil shippers that they do not want them to move loaded crude trains to private rail car storage facilities on their tracks due to safety concerns, three sources in the crude-by-rail industry said.

The railroads are telling clients that tank cars are not a prudent long-term storage mechanism for a hazardous commodity such as crude, and do not want to put a loaded unit train in a private facility and potentially create a safety hazard, they said.

Federal rules typically only allow crude in rail cars to be stored on private tracks. There is no federal data on how much oil is regularly put in rail storage, but analysts said it is very little.

“Most federal regulations require rail cars loaded with … crude oil to be moved promptly within 48 hours. Therefore, federal regulations discourage shippers and railroads from leaving crude oil in transportation for an extended time,” transportation lawyers at Clark Hill LLC wrote in an article Thursday.

BNSF did not respond to several requests for comment. Union Pacific declined to comment.

Nearly 142 million barrels of crude moved via rail in the U.S. in 2019, representing about 10% of what is transported via pipelines, according to the U.S. Energy Department. Unit trains, made up entirely of tank cars, can carry around 60,000-75,000 barrels.

Even on smaller or mid-sized railroads, known as shortlines, there may be capacity constraints or insurance coverage may not be adequate, the railroads have said, advising rail companies not to store oil.

“It is arbitrary, and is happening at a time when it (storage) is an option being heavily considered by all companies that have access to crude by rail right now,” one of the sources said.

As of September, there was enough crude storage capacity in the U.S. for about 391 million barrels of out of about 700 million working capacity, excluding the strategic reserve, according to the U.S. Energy Department. However, U.S. stocks have risen by 32.5 million barrels in just the last 4 weeks, including a 15-million-barrel gain in the latest week, the most ever.

Crude-by-rail shipments were not economic when oil prices were high but are expected to rise as prices have plunged. Loadings out of the Permian basin, the biggest in the country, slumped to about 12,500 barrels per day (bpd) in January, the lowest in at least a year, before rising to about 13,200 bpd in February, according to data from Genscape.

Demand is falling so swiftly that rail cars loaded with crude may not be accepted by the time they reach their destination three-to-five days later, leaving barrels orphaned without a storage option, one trader said.

Rates to lease rail cars have dropped sharply due to the crash in oil prices, making them more attractive for storage. Lease rates for rail cars have fallen from about $800 per month to about $500, said Ernie Barsamian, founder and CEO of The Tank Tiger, a terminal storage clearinghouse.



Saudi, Russia debate record oil cut as U.S. resists action By Reuters


© Reuters. FILE PHOTO: The sun sets behind a crude oil pump jack on a drill pad in the Permian Basin in Loving County

By Rania El Gamal, Olesya Astakhova and Ahmad Ghaddar

DUBAI/MOSCOW/LONDON (Reuters) – OPEC and Russia will debate record oil output cuts on Thursday to prop up prices wrought by the coronavirus pandemic but their talks are complicated by internal disagreements and the reluctance of the United States to join the action.

Global fuel demand has plunged as much as 30% as measures to fight the virus have grounded aircraft, reduced vehicle usage and curbed economic activity.

Benchmark Brent crude oil prices () hit an 18-year low last month and are trading below $34 a barrel, half their level at the end of 2019, dealing a severe blow to budgets of oil producing nations and high-cost U.S. shale oil industry. [O/R]

U.S. President Donald Trump said last week a deal he had brokered with OPEC leader Saudi Arabia and Russia could lead to cuts of as much as 10 million to 15 million barrels per day (bpd) or 10% to 15% of global supplies, an unprecedented reduction.

Riyadh and Moscow, who fell out when a previous pact on curbing supplies collapsed in March, have signalled that their agreement to new, much deeper cuts would depend on the United States and others outside a group known as OPEC+ joining in.

A video conference for ministers from OPEC+, which groups Organization of the Petroleum Exporting Countries, Russia and other oil producers, as well as additional participants is due to start at 1400 GMT. The United States has been invited.

Trump has been reluctant to mandate cuts in domestic supply so far, saying production had been falling naturally because of low prices anyway. Russia said on Wednesday that such declines would not count as a proper cut.

In a further complication, Moscow and Riyadh are struggling to agree on the levels from which output should be cut with the kingdom insisting on April, the first month of a large hike in its output, while Moscow insists on the first quarter.

“I’m not sure how Russia and Saudi Arabia would be able to iron out their differences today, it all could be stretched out,” one Russian source told Reuters.

Two OPEC sources agreed that the differences were still big.

Two Russian sources said the maximum Russian cut would be 2 million bpd or around 17% of its output. Saudi Arabia has yet to indicate how much it is prepared to cut.

DEMAND SHOCK

Goldman Sachs (NYSE:) and UBS both said on Thursday the suggested cuts, however deep, would not be enough to address a massive decline in global demand and predicted that oil prices could fall back to $20 per barrel and even lower.

“Ultimately, the size of the demand shock is simply too large for a coordinated supply cut,” Goldman said in a note.

Trump warned on Wednesday that he had many options if Saudi Arabia and Russia failed to reach a deal on Thursday.

U.S. senators have previously called on the White House to impose sanctions on Riyadh, pull out U.S. troops from the kingdom and impose import tariffs on Saudi oil.

Thursday’s OPEC+ talks will be followed by a meeting of energy ministers from the Group of 20 nations (G20) on Friday.

To figure out how a cut would be shared among producers, Moscow, Riyadh and others would need to agree on what output levels to use as a baseline for calculating cuts.

That issue has been muddied by a battle between Saudi Arabia and Russia for market share that erupted after an acrimonious OPEC+ meeting in Vienna in March.

At that meeting, Russia refused to participate in cuts proposed by Saudi Arabia in response to the coronavirus crisis. In response, Riyadh said it would pump at maximum capacity and flooded an already oversupplied market with extra crude.

Saudi Arabia ramped up output to a record 12.3. million bpd in April, up from below 10 million bpd in March. The kingdom’s Gulf allies, Kuwait and the United Arab Emirates, also raised production.

Russian TASS news agency said any cuts could last three months starting from May.

The largest one-off cut OPEC has ever agreed till now was 2.2 million bpd in 2008.



Oil prices rise on optimism OPEC+ meeting will result in supply cut


MELBOURNE/SINGAPORE (Reuters) – Oil prices rose on Thursday on expectations the world’s largest oil producers would agree to cut production at a meeting later in the day as the industry grapples with a coronavirus-driven collapse in global oil demand.

FILE PHOTO: Oil pump jacks work at sunset near Midland, Texas, U.S., August 21, 2019. Picture taken August 21, 2019. REUTERS/Jessica Lutz/File Photo

Brent crude LCOc1 futures rose 1.2%, or 41 cents, to $33.25 a barrel as of 0529 GMT. The contract rose to an intra-day high of $33.90, climbing for a second day.

U.S. West Texas Intermediate (WTI) crude CLc1 futures were up 3.3%, or 82 cents, at $25.91 a barrel, after earlier climbing by as much as 6.1%.

The Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia – a group known as OPEC+ – are set to convene a video conference meeting on Thursday.

The meeting is expected to be more successful than their gathering in March, where they failed to agree to extend supply cuts and triggered a price war between Saudi Arabia and Russia.

Hopes of an agreement to cut between 10 million and 15 million barrels per day (bpd) rose after media reports suggested Russia was ready to reduce its output by 1.6 million bpd and Algeria’s energy minister said he expected a “fruitful” meeting.

Such a sizable reduction would be far bigger than any production cut OPEC has ever agreed on before.

“We’re waiting with bated breath,” said Lachlan Shaw, head of commodity research at National Australia Bank.

“I think there’ll be a deal, which will bring a bit of cheer in the short run. Then everyone’s attention will refocus on the fundamentals. The fundamentals are appalling,” he said.

Following the OPEC+ meeting, energy ministers from the Group of 20 major economies are set to meet to find ways to help ease the impact of the COVID-19 pandemic on global energy markets.

“If the G20 came out and talked about adding to strategic reserves, that would be taken positively,” Shaw said.

However with oil prices having lost half their value since the start of the year and oil demand forecast to slide as much as 30%, analysts are sceptical about how effective an OPEC+ cut would be in shoring up prices.

“Ultimately, the size of the demand shock is simply too large for a coordinated supply cut,” Goldman Sachs said in a note.

Moreover, given the rapidly rising oil inventories, the market is likely to be still awash with cheap oil even when demand recovers.

U.S. Energy Information Administration data on Wednesday showed crude stocks rose by 15.2 million barrels, their biggest ever one-week rise.

Reporting by Sonali Paul; Additional reporting by Seng Li Peng; Editing by Shri Navaratnam and Christian Schmollinger



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Oil Prices Up Despite Oversupply Fears By Investing.com


© Reuters.

By Gina Lee

Investing.com – Oil prices swung up in Asia on Wednesday morning as they rebounded from sharp losses during the previous session.

The past two sessions took the black liquid on a rollercoaster ride as  rose 1.95% to $32.49 from its slump of almost 10% in the last session by 10:13 PM ET (3:1AM GMT) clawed back its loss of 3.57% as it jumped 5.12% to $24.84.

Prices dropped overnight as the American Petroleum Institute (API) estimated a huge build of 11.9 million barrels in the U.S. crude oil inventory for the week ending April 3. Investors still worried about an oversupply against plummeting demand as they compared the estimate to analyst forecasts of 9.3-million-barrel build prepared by Investing.com.

They will have to wait and see for the results of OPEC+’s online on Thursday to discuss and attempt to resolve the ongoing price war between Russia and Saudi Arabia.

But some are already worried that the meeting will not be enough.

“With 28 million bpd of oversupply in the oil market in April and 21 million bpd in May, the global coordinated production cuts that are really needed may be too large for the producers to accept; perhaps twice as large as the numbers being discussed,” Rystad Energy’s Bjornar Tonhaugen told CNBC. 

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Oil prices jump as focus swivels to OPEC, Russia meeting on output cuts By Reuters


© Reuters. FILE PHOTO: A maze of crude oil pipes and valves at the Strategic Petroleum Reserve in Freeport, Texas

SEOUL (Reuters) – Oil climbed on Wednesday, reversing most of the prior session’s losses, as investors pinned hopes on a Thursday meeting where OPEC members and allied producers will discuss output cuts to shore up prices that have tumbled amid the coronavirus pandemic.

Brent crude () was up by 72 cents, or 2.3%, at $32.59 per barrel by 0044 GMT after falling 3.6% on Tuesday. U.S. West Texas Intermediate (WTI) crude () rose $1.30, or 5.5%, to $24.93 a barrel after dropping 9.4% in the previous session.

Thursday’s meeting between members of the Organization of Petroleum Exporting Countries (OPEC) and its allies, including Russia, is widely expected to be more successful than their gathering in early March. That ended in failure to extend cuts and a price war between Saudi Arabia and Russia amid slumping demand.

But doubts remain over the role of the United States in any production curbs.

Saudi Arabia, OPEC member countries and Russia are likely to agree to cut output, but that accord could be dependent on whether the United States would go along with cuts. The U.S. Department of Energy said on Tuesday that U.S. output is already declining without government action.

“Saudi Arabia and Russia continue to hammer out a deal … What is clear is that the United States must be involved,” ANZ Research said in a note.

U.S. crude production, meanwhile, is expected to slump by 470,000 bpd and demand is set to drop by about 1.3 million bpd in 2020, the U.S. Energy Information Administration (EIA) said on Tuesday.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Trump says OPEC has not asked him for a U.S. oil production cut By Reuters


© Reuters. U.S. President Trump leads daily coronavirus response briefing at the White House in Washington

By Jeff Mason

WASHINGTON (Reuters) – President Donald Trump said on Monday that OPEC had not pressed him to ask U.S. oil producers to reduce their output to support global prices, which have been hard-hit by the economic fallout of the coronavirus pandemic.

Trump said U.S. oil production had already fallen, anyway.

“I think it’s happening automatically but nobody’s asked me that question yet so we’ll see what happens,” the president told a press briefing Monday afternoon.

Major oil producers including Saudi Arabia and Russia are likely to agree to cut production at a Thursday meeting but only if the United States joins the effort, three sources involved told Reuters on Monday.

“Without the U.S., no deal,” one of the sources said.

Worldwide oil demand has dropped by roughly 30%, or about 30 million barrels a day as the coronavirus pandemic brings the world economy to a standstill, at the same time that Saudi Arabia and Russia have been flooding markets with extra supply.

That has been a major problem for the economy of the United States, which has grown into the world’s largest oil and gas producer, because it has threatened the once-bustling drilling industry with layoffs and bankruptcies.

Several U.S. drilling companies have already scaled back production because of the drop in oil prices, which have lost around two-thirds of their value so far this year.

Last week, in response to the weeks-long market rout, the Organization of the Petroleum Exporting Countries and its allies including Russia, a group known as OPEC+, started talking about cutting production, but they want other non-OPEC nations to participate, particularly the United States.

The renewed discussions among members of OPEC+ began after Trump pressured Riyadh and Moscow to make a deal in a series of phone calls. Trump said last week he had made no concessions and did not agree to a U.S. production cut.

Normally any coordinated decision by U.S. oil producers to reduce output to boost prices would violate antitrust laws.

But if the federal government leads the charge such an effort would arguably be legal, according to Barbara Sicalides, an antitrust expert at Pepper Hamilton LLP.

(Aditional reporting by Diane Bartz; Editing by Richard Valdmanis, Sandra Maler and Sonya Hepinstall)

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Oil Prices Drop as OPEC Meeting Postponed to Thursday By Investing.com


© Reuters.

By Gina Lee

Investing.com  Oil prices slid in Asia on Monday morning as OPEC+ delayed a meeting scheduled for later in the day to Thursday.

International  lost 6% to $32.74 by 9:55 PM ET (2:55 AM GMT) and U.S.  also dropped 6.1% to $26.61, continuing their slide from the last session.

The announcement of the meeting, called to mediate a truce between Saudi Arabia and Russia in their ongoing price war sent oil prices soaring last week.

But tensions between the two producers led to a three-day postponement and increased investor fears that these latest talks will also end in failure like the last meeting in March.

“It’s probably going to crater,” Again Capital’s John Kilduff told CNBC. “There was a lot of optimism priced into oil Thursday and Friday. With this new Saudi, Russia spat, it doesn’t look like it’s going to come together.”

Saudi oil minister Khalid A. Al-Falih called for producers “outside of OPEC+,” such as the United States, Canada and Norway, to lend their support on Sunday.

As the COVID-19 pandemic continues to reduce global demand, oil still cannot resolve its inevitable oversupply dilemma.

“The energy sector is facing its most challenging fundamental period since the Great Energy Depression of 1981-1995,” Kurt HalleadRBC co-head of global energy research, told CNBC.

“On the oil front, demand is set to decline by amounts never before seen driven by the COVID-19 global economic shock while supply is surging due to the Saudi-Russia oil price war,” he added.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Oil falls after Saudi Arabia, Russia delay meeting


LONDON (Reuters) – Oil prices fell on Monday, after Saudi Arabia and Russia delayed a meeting to discuss output cuts that could help reduce global oversupply as the coronavirus pandemic pummels demand.

Brent crude LCoc1 fell more than $3 when Asian markets opened but recovered some ground with traders hopeful that a deal between the top producers was still within reach.

At 0814 GMT, Brent was down $1.10, or 3.2%, at $33.01 a barrel. U.S. crude CLc1 were 84 cents, or 3%, lower at $27.50 a barrel, off a session low of $25.28.

The Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, is expected to meet on Thursday, instead of Monday, to discuss cutting production.

“Perhaps it is best that the meeting was delayed for producers to cement a minimum of common ground before the actual discussions take place on Thursday,” said BNP Paribas analyst Harry Tchilinguirian, although he said initial disappointment at the delay had driven down prices in Asian business.

(GRAPHIC: Oil prices – here)

OPEC+ is working on a deal to cut oil production by about 10% of world supply, or 10 million barrels per day (bpd), in what member states expect to be an unprecedented global effort.

The countries are “very, very close” to a deal on cuts, one of Russia’s top oil negotiators, Kirill Dmitriev, who heads the nation’s wealth fund, told CNBC.

But Rystad Energy’s head of oil markets Bjornar Tonhaugen said even if the group agree to cut up to 15 million bpd, “it will only be enough to scratch the surface of the more than 23 million bpd supply overhang predicted for April 2020.”

Still, sentiment was lifted by Saudi Arabia’s decision to delay releasing its crude official selling prices to Friday to wait for the outcome of the OPEC+ meeting.

U.S. President Donald Trump has said he would impose tariffs on crude imports if he needed to protect U.S. energy workers from the oil price crash that has been exacerbated by the war between Russia and Saudi Arabia over market share.

FILE PHOTO: An employee holds a sample of crude oil at the Yarakta oilfield, owned by Irkutsk Oil Co, in the Irkutsk region, Russia on March 11, 2019. REUTERS/Vasily Fedosenko//File Photo

Rig counts in the United States fell by 62 last week, energy services firm Baker Hughes Co BRK.N said on Friday, marking the biggest weekly drop in five years, as U.S. energy companies slashed spending on new drilling due to a coronavirus-related slump in economic activity and fuel demand.

(GRAPHIC: Goldman Sachs on oil demand destruction – here)

Reporting by Bozorgmehr Sharafedin; Additional reporting by Florence Tan in Singapore and Jessica Resnick-Ault in New York



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Oil prices decline $3 a barrel as market remains uncertain on supply outlook By Reuters


© Reuters. FILE PHOTO: The sun is seen behind a crude oil pump jack in the Permian Basin in Loving County

By Jessica Resnick-Ault

NEW YORK (Reuters) – Global benchmark oil prices traded as much as $3 a barrel lower as the market opened for Monday’s trading session, reflecting fears of oversupply after Saudi Arabia and Russia postponed to Thursday a meeting about a potential pact to cut production.

Late last week, prices had surged, with both U.S. and Brent contracts posting their largest weekly percentage gains on record due to hopes that OPEC and its allies would strike a global deal to cut crude supply worldwide.

The COVID-19 pandemic caused by the novel coronavirus has cut demand and a month-long price war between Saudi Arabia and Russia has left the market awash in crude. During the month, prices have plummeted as the market has waited for a plan to cut production from OPEC and its allies.

Over the weekend, Saudi Arabia sent a signal that a production cut deal may be ahead, potentially muting the price decline. U.S. President Donald Trump said he will put pressure on Saudi Arabia and its allies for such a deal.

“I don’t know that anyone is going to get too aggressively short before the meeting,” said Robert McNally, president of Rapidan Energy Group in Bethesda, Maryland.

Brent crude () traded lower by $2.39 a barrel, or 7%, by 6:16 p.m. EDT (10:16 GMT) after earlier touching a session low of $30.03 a barrel.

U.S. crude () traded down $2.41 a barrel, or 8.5%, at $25.93 a barrel.

Saudi Arabia’s decision to postpone its posting of the international prices for its crude for the first time indicates that it is not eager to flood the market with low-priced crude before a potential agreement. “That’s a pretty clear sign that they are open to cutting production in May,” McNally said. The kingdom delayed the release until Friday to wait for the outcome of the meeting between OPEC and its allies regarding possible output cuts, a Saudi source told Reuters.

Trump said on Saturday that he will put tariffs on Saudi and Russian production, potentially accelerating an output cutback.

OPEC and its allies postponed an emergency meeting scheduled for Monday, led by Saudi Arabia, where the oil cuts could be agreed upon. A senior Saudi source told Reuters on Sunday that the kingdom would now host the meeting via videoconference on Thursday and the delay was to allow more time to bring other producers on board.

Russian President Vladimir Putin put the blame for the crash in prices on Saudi Arabia on Friday – prompting a response from Riyadh the following day disputing Putin’s assertions.

OPEC and its allies are working on a global agreement for an unprecedented oil production cut equivalent to around 10% of worldwide supply in what they expect to be a global effort including countries that do not exert state control over output, such as the United States.

Trump has, however, made no commitment to take the extraordinary step of persuading U.S. companies to cut output.

Per Magnus Nysveen, head of analysis at Rystad Energy, said the decline in global demand because of the coronavirus pandemic and the global lockdowns was larger than the proposed cuts by the OPEC+ alliance.

“It is not strange for the market to hike prices by enthusiasm such as Friday’s, but for the levels to stay stable for more than a day or two, it takes concrete developments and deals on the ground,” he said.