Oil Prices Have Collapsed After OPEC+ Talks End Without A Deal

CNBC: Oil prices plunge 8% after OPEC+ fails to agree on a massive production cut

* Oil prices sank to multi-year lows on Friday as OPEC’s allies rejected additional production cuts proposed by OPEC on Thursday.
* U.S. West Texas Intermediate crude fell nearly 9% at the session low, while international benchmark Brent crude dropped more than 9% at its low. Each contract shed more than $4.00 at the session low.
* The current production cuts will be in place until the end of March as planned, but it’s uncertain if they will extend beyond this month.

Oil prices sank more than 8% to multi-year lows on Friday as OPEC’s allies rejected additional production cuts proposed by OPEC on Thursday.

U.S. West Texas Intermediate crude slid more than 8.8% to a session low of $41.77, its lowest level since August 2016. International benchmark Brent crude slid more than 8.5%, or $4.29, to trade at $45.70 per barrel. At its session low it was down more than 9%, touching its lowest level since at least June 2017.

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WNU Editor: For countries that are dependent on oil exports and high prices, this is a disaster.

More News On The Collapse Of Oil Prices

OPEC cuts deal falls apart as Russia resists, sending oil into tailspin -- Reuters
OPEC, Russia fail to agree on output cut, oil price dives -- AP
Oil Nosedives As OPEC Fails To Strike A Deal -- OilPrice.com
"Today Will Be A Regretful Day" - Oil Prices Have Collapsed After OPEC+ Talks End Without A Deal -- Zero Hedge

OPEC Agrees To A Massive Cut In Oil Production Due To The Coronavirus Outbreak

Reuters: OPEC backs extra 1.5 million bpd output cut if Russia joins in: sources

VIENNA (Reuters) - OPEC agreed on Thursday to cut output by an extra 1.5 million barrels per day (bpd) in the second quarter of 2020 to support prices amid an outbreak of coronavirus but made it conditional on Russia joining in, two OPEC sources said.

Saudi Arabia had suggested OPEC and its allies, including Russia, cut up to 1.5 million barrels per day (bpd) for the second quarter of 2020 while keeping existing cuts of 2.1 million bpd, which expire this month, in place until the end of 2020.

But Riyadh, the biggest producer in the Organization of the Petroleum Exporting Countries, and other members of the group have yet to win Russian support for such a deal. So far, Moscow has indicated it would back an extension but not a deeper cut.

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WNU Editor: This cut in oil production will not be enough. The world's economy is slowly shutting down due to the coronavirus outbreak. Quarantines are becoming the norm, and people are staying home. And if the US economy slow downs because of this outbreak, which I predict it will, expect even more pressure on oil prices.

Update: I agree with this prediction .... A $30 Oil Price Is the Real Virus Threat to OPEC (Bloomberg).

More News On OPEC Agreeing To A Massive Cut In Oil Production Due To The Coronavirus Outbreak

OPEC Mulls Big Production Cut of 1.5 Million Barrels a Day -- USA Today/AP
OPEC agrees on massive oil supply cut to offset virus impact; awaits Russia’s approval -- CNBC
OPEC Agrees To 1.5MM Barrel Output Cut, But Fails To Obtain Critical Russian Backing -- Zero Hedge
OPEC agrees biggest oil production cut since 2008 financial crisis, but only if Russia joins -- RT

Russia Says No To Proposed OPEC Production Cuts Due To The Cut In Oil Demand From China Caused By The Coronavirus Outbreak

CNBC: Russia’s reluctance for a production cut exposes possible crack in three-year-old OPEC alliance

* Russia has not so far endorsed a recommendation from a technical committee for OPEC and its allies to deepen production cuts. Oil analysts said it shows a possible lack of harmony in the producers’ alliance.
* The technical committee monitoring the market and production for OPEC+ recommended a 600,000 barrel a day additional cut to stabilize the market.
* The impact of the coronavirus on transportation in China and elsewhere has dealt a serious blow to the oil market, which could see demand drop by 1 million to 2 million barrels a day temporarily.

Russia’s reluctance to jump on board a bigger OPEC production cut may signal a potential fissure within the oil producer alliance, known as OPEC plus.

Led by Saudi Arabia, other OPEC producers and Russia were considering an emergency meeting to cut production in response to the impact of the coronavirus, but it’s not now clear whether that will happen.

A committee advising the producers met for three days in Vienna and on Thursday recommended a 600,000 barrel a day reduction in production to bring relief to the oil market, according to reports. The Joint Technical Committee, made up of representatives of producing countries, is not a decision making entity, and it only makes recommendations to the ministers of OPEC countries and its allies, including Russia.

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Update #1: Oil is in a tailspin over the coronavirus and OPEC might not be coming to the rescue (CNN)
Update #2: Factbox: Coronavirus hits demand for oil, energy (Reuters)

WNU Editor: OPEC wants a 600,000 barrel/day production cut, but China has already reported that they are expecting a massive 25% drop in oil demand .... China energy executives braced for 25% fall in domestic oil demand (Financial Times). If this virus spreads and infects other Asian countries in the same manner as it has in China, OPEC is going to be under more pressure for production and price cuts. I also expect a major hit for other commodity demands and prices.

Update #3: I am expecting a 2% - 3% drop in the world's GDP if this crisis continues for the next few months.

OPEC Panel Agrees To Deepen Oil Output Cuts

Saudi Arabia's Minister of Energy, Prince Abdulaziz bin Salman, arrives Thursday at the Vienna headquarters of OPEC, which is scheduled to meet on Friday with Russia and other producers - a grouping known as OPEC+ (Leonhard Foeger/Reuters)

Al Jazeera: OPEC and its allies agree to deepen oil output cuts

OPEC+ panel recommends additional output cuts of 500,000 bpd, but there's no clarity yet on how long they could last.

The Organization of the Petroleum Exporting Countries (OPEC) and its allies led by Russia on Thursday agreed to one of the deepest output cuts this decade to support crude prices and prevent a glut, though they are still debating how long the curbs will last into next year.

OPEC is meeting to discuss supply policy in Vienna and is scheduled to meet on Friday with Russia and other producers - a grouping known as OPEC+.

Russian Energy Minister Alexander Novak said a panel of key energy ministers - including those from Saudi Arabia and Russia- had recommended that the OPEC+ group deepen existing supply curbs of 1.2 million barrels per day (bpd) by another 500,000 bpd. The cut of 1.7 million bpd would amount to 1.7 percent of global supply.

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WNU Editor: They are nowhere near agreement on how these cuts will be distributed.

More News On OPEC's Panel Agreeing To Deepen Oil Output Cuts

OPEC talks end without announcement of expected cuts -- AP
OPEC+ Committee Recommends Further 500,000 Bpd Cut -- OilPrice.com
OPEC, allies agree to deepen oil output cuts -- Reuters
Oil Unimpressed As OPEC+ Committee Recommends Further 500,000 Bpd Cut -- Zero Hedge