NEW YORK (Reuters) - Oil Brent suffered this Friday the biggest daily drop in more than 11 years. This being so after Russia opposed broad production cuts suggested by the Organization of Petroleum Exporting Countries (OPEC). Though to stabilize commodity prices amid the coronavirus epidemic, OPEC has hit back by removing its own pumping limits.
More than 1 million WTI oil contracts were traded during the day. After the three-year-old Russia-OPEC pact collapsed.
prices plummeted
“Prices plummeted because the OPEC meeting turned out to be an epic failure on the part of everyone involved. Russia has clearly decided to employ a scorched earth approach to the oil market. Every country for itself though,” said John Kilduff, partner at Again Capital in New York.
Brent crude futures saw their biggest one-day percentage drop since December 2008, closing down $4.72, or 9.4%, at $45.27 a barrel. This is the lowest closing level for Brent, the international benchmark, since June 2017.
US WTI crude fell $4.62, or 10.1%, to end the day at $41.28 a barrel, its lowest closing level since August 2016 and biggest daily percentage drop since November 2014. .
More than 4.58 million first-month WTI contracts changed hands this week, the busiest in history for expiry.
Both Brent and WTI have accumulated losses of over 30% in the year to date.
Split between OPEC and Russia
The division between OPEC and Russia revived fears related to the “crash” of the oil market in 2014. However, when the Saudis and Russians began to fight for market share with US producers, who never participated in agreements to limit supply.
OPEC had been pushing for additional production cuts of 1.5 million barrels a day by the end of 2020.
The deal would take total production cuts by OPEC+, an alliance between OPEC, the Russians and other countries, to a total of 3.6 million bpd, or about 3.6% of global supply.
“(As of April 1) all oil producers will be able to produce as much as they want,” analysts at ABN Amro said in a report. The Dutch bank cut its 2020 Brent price forecast by 15.5% to $49 a barrel.
The bank noted, however, that OPEC Secretary General Mohammad Barkindo has indicated that there will be more informal meetings on the proposed cuts in the coming weeks.
ABN Amro lowers Q1 Brent oil price forecast to US$ 40/barrel
Brent production
(Reuters) - ABN Amro on Friday lowered its Brent crude oil price forecast at the end of the first quarter of 2020 to $40 a barrel from $60/barrel previously projected.
The institution also lowered the estimate of the average price of Brent in 2020 to 49 dollars per barrel, from 58 dollars/barrel seen previously. Meanwhile, the projection for the average price of oil in the United States (WTI) this year has been reduced to 43 dollars per barrel.
“Due to the drop in global demand for oil, in conjunction with the already existing oversupply, it is likely to grow further. Therefore, oil prices are likely to operate at a lower level and for a longer period of time,” said ABN Amro.
This Friday, after Russia opposed the production cuts suggested by the Organization of Petroleum Exporting Countries (OPEC). In order to stabilize commodity prices, quotations fell by around 10%. Both Brent and WTI are down more than 30% in 2020.
