Oil prices slumped on Monday, pulling back from last week’s gains after Saudi Arabia and Russia delayed a meeting of oil producers aimed at resolving growing worldwide oversupply as the coronavirus pandemic pummels demand.
The global oil market rebounded over 35% last week after sources at the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, said they are close to a deal on oil output cuts to reduce a global glut, though they want participation from the United States and others.
However, the meeting of the OPEC+ group,originally scheduled for Monday, has been delayed to Thursday as sniping between Russia and Saudi Arabia over last month’s collapse of an existing supply-cut agreement continued. Fuel demand is down by roughly 30% worldwide due to the coronavirus while those nations are flooding markets with unneeded supply.
“The delay in the OPEC+ meeting sparked much of today’s selloff as a result of major philosophical differences between Russia and the Saudis that will likely preclude a deal on Thursday,” said Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois.
On Monday, Kirill Dmitriev, one of Moscow’s primary oil negotiators, said that Russia and the Saudis were close to a deal to cut output.
Brent futures LCOc1 settled $1.06, or 3.1%, lower at $33.05 a barrel, while U.S. West Texas Intermediate (WTI) crude CLc1 fell $2.26, or 8%, to end at $26.08.