A maze of crude oil pipes and valves is pictured during a tour by the Department of Energy at the Strategic Petroleum Reserve in Freeport, Texas, U.S. June 9, 2016. REUTERS/Richard Carson
WASHINGTON - 6 April 2020: Brent crude futures could plunge to “single-digit lows” if major oil producers fail to reach a deal to cut output at a time when demand has collapsed due to the coronavirus pandemic, Fitch Solutions said in Friday report published by CNBC on Monday.
The Organization of the Petroleum Exporting Countries and its allies are expected to meet on Thursday — a delay from Monday — in an attempt to agree on production cuts.
A previous deal by the group — commonly known as OPEC+ — expired in March after Saudi Arabia and Russia failed to reach an agreement. The fallout sent oil prices plummeting to multi-year lows.
Analysts from Fitch Solutions said a fall in demand and an increase in supply could result in more than 20 million barrel per day of excess oil. That would put the oil market under “extreme physical pressure".
Oil futures have fallen by roughly 50 percent since the start of the year. On Monday, however, oil prices trimmed earlier losses after Kirill Dmitriev, the chief executive of Russia’s sovereign wealth fund, told CNBC on Monday that Moscow and Riyadh were “very close” to a deal.
Brent crude fell by around 1.7 percent to $33.53 a barrel, while the U.S. West Taxes Intermediate crude dipped by 2 percent to around $27.72 a barrel.