Oil price under downward pressure due to the cancellation of the meeting of oil producing countries |
[ Time:2020-03-18 | Hits:464 ] |
| The organization of petroleum exporting countries (Opec) and non-opec technical meeting scheduled to take place in Vienna on Monday has reportedly been cancelled after Saudi Arabia and Russia failed to negotiate a deal to cut output. The move will make it difficult to support lower crude prices as some oil companies cut spending to cope. Oil prices have fallen more than 40 per cent to below $30 a barrel, their lowest since January 2016, since a ministerial meeting of oil producers on March 6 failed to reach an agreement on deeper or longer cuts. The latest agreement to cut output is due to end at the end of the month, and a scramble by major producers is expected to undermine support for prices. Russia had previously refused to support further production cuts. In response, Opec lifted its own production restrictions. Other Opec members have tried to mediate between Saudi Arabia and Russia, so far without success. Sources said it was difficult to reach a compromise. An Opec source told media it would be difficult for Saudi Arabia to make concessions. Another source said it was an "all-out price war" between oil producers. Saudi aramco is likely to maintain high production, its President and chief executive officer said Monday, suggesting the company is prepared to tolerate low oil prices for some time. The price of crude oil futures fell sharply in the morning of May 16, then pared its losses earlier in the day and continued to fall in the afternoon. Light crude for April delivery ended the day down $3.03, or 9.55%, at $28.7 a barrel on the New York mercantile exchange. In London, brent crude for may delivery fell $3.80, or 11.23%, to $30.05 a barrel. Tonhaugen, head of oil market research at energy consultancy reistad energy, said potential oil demand was likely to fall more than ever in March and April, even as producers such as Opec continue to increase supply. Oil prices have had a very negative market reaction, but are not expected to bottom out. US President Donald trump announced Thursday that he will begin the purchase and storage of the us strategic crude oil reserve, taking advantage of low oil prices to fill the strategic crude oil reserve base. Kilduff, founder of Again capital, said pumping oil into the strategic base now could slow the selling in the oil market. Many oil companies are retrenching in response to falling prices. Global oil demand growth is likely to be negative this year, putting downward pressure on prices, bp chief financial officer Gilvary16 said Tuesday. The company is financially prepared for the operational risks that could arise from a further 20 per cent fall in oil prices. "We are reviewing all appropriate measures to substantially reduce capital and operating expenses in the short term," exxonmobil chief executive officer Tiger Woods said on Thursday as the company said it would slash expenses. The company's project budget for this year had been set at between $30 billion and $33 billion. The agency expects it to cut spending by 10% to 12%, with capital spending falling to $28 billion to $29 billion. Exxon mobil shares fell 9.52 percent to $34.49, their lowest level since 2003. |