Crude prices fell Monday, a day after major oil producers struck a historic deal to cut oil production, as analysts at Goldman Sachs and elsewhere said the moves were “too little, too much late ”after weeks of a damaging price war between Saudi Arabia and Russia.
West Texas Intermediate crude oil for May delivery after initial push of 4%
fell 17 cents, or 0.7%, to $ 22.59 per barrel. WTI fell nearly 20% last week, while June Brent crude
the world benchmark ends the period down almost 8%. Brent crude oil lost 36 cents, or 1.3%, to $ 31.08 a barrel.
This total would drop to about 8 million barrels a day from July 1 to December 31, followed by 6 million barrels of cuts from January 1, 2021 to April 30, 2022. Analysts feared that the lack of a deal could have resulted in a collapse on Monday, but some see oil prices still under pressure, as demand has been crushed by economic closings caused by coronaviruses.
“Given the difficulty for most producers outside of basic OPEC to implement major cuts, today’s agreement leaves voluntary cuts still too little and too late to avoid breaking capacity storage, ensuring that low oil prices force all producers to contribute to rebalancing the market. Said Damien Courvalin, Callum Bruce and Jeffrey Currie, analysts at Goldman Sachs, in a note to clients.
“Ultimately, this simply reflects that no voluntary reduction could be large enough to compensate for the April-May average demand loss of 19 mb / d from coronavirus. We therefore reiterate our view that domestic crude prices will continue to fall in the coming weeks as storage capacity becomes saturated and we expect further weakness in WTI execution times and crude oil prices at Over the next few weeks, as already planned on Friday, with downside risks for our $ 20 short-term / bbl forecast, “said the team.
The closure of major world economies due to the deadly coronavirus has weighed heavily on demand for oil.