Oil's Trump Bump Fades as Doubts Rise
(Bloomberg) -- Oil slid back below $25 a barrel after a record surge as doubts crept in about a deal touted on Twitter by U.S. President Donald Trump that would see deep supply cuts from producers including Saudi Arabia and Russia.
Futures dropped as much as 7.1% after surging almost 25% in New York on Thursday following Trump’s tweet that he expected global producers to slash output by 10 million barrels or more. However, the Kremlin later said that President Vladimir Putin had not spoken to his Saudi counterpart and hasn’t agreed to reduce production. Citigroup Inc. and Goldman Sachs Group Inc. said any supply deal would be too little, too late as demand craters.
While futures spiked, the outlook for the physical market remains bleak as discounts for some grades of physically delivered oil across the U.S. and Canada widened. Heavy Louisiana Sweet crude lost $1.75 a barrel relative to West Texas Intermediate to a record $10.50 discount.
Oil has whipsawed this week after plunging to an 18-year low on Monday. While Trump tweeted that he had spoken to Saudi Crown Prince Mohammed bin Salman, who had in turn spoken with Russian president, a person familiar with the situation said the U.S. president’s goal is purely aspirational and will ultimately hinge on whether Riyadh and Moscow can reach a deal.
After Trump’s request, Saudi Arabia said it had called a meeting of the OPEC+ alliance that includes Russia to discuss a “fair agreement,” signaling it would only cut output if others do so. Producers are facing an unprecedented collapse in demand as nations try to stem the spreading coronavirus.
“Even if there is an agreement to curtail 10 million barrels a day of output, the fundamentals show demand destruction and inventory builds,” said John Driscoll, chief strategist for JTD Energy Services Pte in Singapore. The “anxiety and mayhem out there is reminiscent of the financial crisis,” he added.
West Texas Intermediate for May delivery fell $1.26, or 5%, to $24.06 a barrel on the New York Mercantile Exchange as of 1:53 p.m. Singapore time. The contract is still up about 12% this week, set for the first weekly gain since February. Brent for June settlement lost 4.9% to $28.48 on London’s ICE Futures Europe exchange. Prices are up 14% this week.
Texas Railroad Commission Ryan Sitton, in a rare move for the state’s oil regulator, tweeted on Thursday that he spoke with Russian Energy Minister Alexander Novak and discussed a 10-million barrel a day global output cut and would talk to the Saudi oil minister soon. Trump is scheduled to meet with U.S. oil company executives Friday as the administration seeks ways to help the beleaguered industry.
To contact the reporters on this story:
Sharon Cho in Singapore at ccho28@bloomberg.net;
James Thornhill in Sydney at jthornhill3@bloomberg.net
To contact the editors responsible for this story:
Serene Cheong at scheong20@bloomberg.net
Ben Sharples, Andrew Janes
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
- Japan Failing to Meet Corporate Demand for Clean Power: Amazon
- Russian Navy Enters Warship-Crowded Red Sea Amid Houthi Attacks
- Libya's Surprise Oil Minister Change Throws Spotlight on Output
- Oil Seals Quarterly Gain in Tightening Market
- Oman Sees Increasing Ship-to-Ship Transfers of Russian Oil Bound for India
- Falcon Oil Declares Commercial Flow Test Results for Shenandoah Well
- Macquarie Strategists Expect Brent Oil Price to Grind Higher
- Japan Failing to Meet Corporate Demand for Clean Power: Amazon
- UK Oil Regulator Publishes New Emissions Reduction Plan
- Pennsylvania County Joins List of Local Govts Suing Big Oil over Climate
- PetroChina Posts Higher Annual Profit on Higher Production
- US, SKorea Launch Task Force to Stop Illicit Refined Oil Flows into NKorea
- McDermott Settles Reficar Dispute
- Russian Navy Enters Warship-Crowded Red Sea Amid Houthi Attacks
- USA Commercial Crude Oil Inventories Increase
- New China Climate Chief Says Fossil Fuels Must Keep a Role
- Oil Demand Outpaces Expectations, Testing Calculus on Peak Crude
- House Passes Protecting American Energy Production Act
- TotalEnergies Restarts Production in Denmark's Biggest Gas Field
- USA Oil and Gas Job Figures Jump
- Republican Lawmakers Say IEA Has Abandoned Energy Security Mission
- Blockchain Demands Attention in Oil and Gas
- Houthis Warn Saudi Arabia of Retaliation If It Backs USA Attacks
- Macquarie Sees USA Oil Production Exiting 2024 at 14MM Barrels Per Day
- Summer Pump Prices Set to Hit $4 a Gallon Just as Americans Hit the Road
- Chinese Mega Company Makes Major Oilfield Discovery
- VIDEO: Missile Attack Kills Crew Transiting Gulf of Aden
- Norway Regulator Blasts Proposal to Halt New Oil and Gas Permits
- Chinese Mega Company Makes Another Major Oilfield Discovery
- New China Climate Chief Says Fossil Fuels Must Keep a Role
- What Is the Biggest Risk to Offshore Oil and Gas Personnel in 2024?
- Vessel Sinks in Red Sea After Missile Strike
- Exxon Rights in Stabroek Do Not Apply to Hess Merger with Chevron: Hess
- Analysts Reveal Latest Oil Price Outlook Following OPEC+ Cut Extension
- Equinor Makes Discovery in North Sea