March 9, 2020
Oil prices plunged after OPEC’s failure to strike a deal with its allies regarding production cuts caused Saudi Arabia to slash its prices as it reportedly gets set to ramp up production, leading to fears of an all-out price war.
U.S. West Texas Intermediate crude is on track for its worst day since January 1991, and second worst day on record after plunging 22%, or $9.15, to trade at $32.13 per barrel. Earlier WTI hit a session low of $27.34 per barrel.
International benchmark Brent crude futures were down 21%, or $9.74, to tarde at $35.52 per barrel. Brent futures fell more than 30% to trade at $31.02 at the session low.
“This has turned into a scorched Earth approach by Saudi Arabia, in particular, to deal with the problem of chronic overproduction,” Again Capital’s John Kilduff said. “The Saudis are the lowest cost producer by far. There is a reckoning ahead for all other producers, especially those companies operating in the U.S shale patch.”
On Saturday, Saudi Arabia announced massive discounts to its official selling prices for April, and the nation is reportedly preparing to increase its production above the 10 million barrel per day mark, according to a Reuters report. The kingdom currently pumps 9.7 million barrels per day, but has the capacity to ramp up to 12.5 million barrels per day.
This article was posted: Monday, March 9, 2020 at 6:45 am