According to RIGZONE on March 23, oil prices fell to their lowest level since 2003 as OPEC and Texas failed to reach a production reduction agreement and the US rescue plan was delayed.
London crude oil futures fell about 4% to around $26 a barrel, while West Texas Intermediate crude oil futures rose in April after Friday’s expiration. Ryan Sitton, Commissioner of the Texas Railroad Commission, was rarely invited to OPEC’s June meeting on Friday, but only hours later his call to limit production was rejected by regulators and drillers, and hopes for an agreement began to crumble.
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Kremlin analysts say brinkmanship is under way amid a rapidly fading outlook for oil demand. Some traders believe that crude oil demand plummeted as much as 10 to 20 million barrels a day.
Stephen Innes, chief Asia market strategist at axicorp Ltd., said oil prices could soon fall to $10-15 a barrel if OPEC and Texas fail to reach an agreement on production cuts. Any trader with the ability to store oil may be waiting for a futures premium.
Brent crude oil for May delivery on the London Intercontinental Exchange fell 3.9% to $25.93 a barrel at 7.37. It had previously fallen to $24.68 per barrel. That’s below Wednesday’s closing price of $24.88 a barrel, the lowest since May 12, 2003.
West Texas Intermediate crude for May delivery on the New York Mercantile Exchange rose 1 percent to $22.66 a barrel after falling to a low of $20.80 a barrel. Last week, contracts plunged 29% in April, the biggest decline since 1991.
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The unprecedented impact of supply and demand is reflected in a series of oil market indicators. Brent crude oil’s six-month futures premium is more than $8 / barrel, the largest premium since 2009, and the market structure shows oversupply. A measure of WTI volatility surged 24% on Friday to more than 200 index points, the highest level ever. Meanwhile, hedge funds’ bets on the US benchmark index fell 26% in the week to March 17, though this could be a short covering before the next speculative shock.
Even if crude oil demand returns to normal levels in the middle of this year, 2020 will still see the biggest decline in consumption since reliable records began in the mid-1960s. So far, the biggest annual production reduction has been recorded in 1980, when the global economy was severely affected by the second oil crisis, with a daily production reduction of 2.6 million barrels.
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