Posted: 22 April 2020
Darkest of times for the oil industry
The oil market is still struggling to regain its composure following its catastrophic crash on Monday — even with top exporter Saudi Arabia signalling that it was ready to take further remedial action.
US President Donald Trump also offered soothing words, pledging his administration would “never let the great US oil & gas industry down ,” but a crushing global glut, dwindling storage capacity and the ongoing Covid-19 pandemic are proving hard to overcome.
West Texas Intermediate crude for May delivery spiralled to an eye-popping record low of -$37.63 per barrel on Monday as the contract expiry loomed with buyers unable to take delivery. WTI rebounded as Upstream went to press, rising about 20% to almost $14 per barrel with the countdown to the start of unprecedented output cuts of almost 10 million barrels per day by the Opec+ alliance led by Saudi Arabia and Russia….
“Even as the most influential member of Opec and the largest swing producer, Saudi Arabia has little control over enforcing a collective drop in oil production that would be large enough to stabilise oil prices at present,” Charles Hollis, managing director of risk consultancy Assynt, told Upstream.
He warned that market weakness could lead members of the Opec+ alliance — between Opec and other key producers, led by Russia — not to respect assigned output quotas they agreed to on 12 April when they ended their brutal price war that began on 6 March.