Crude oil contracts opened for trade this week during the Asian trade session and they promptly shed thirty (30) percent. This comes after OPEC failed to reach a supply cut deal with non-member allies led by Russia.
Saudi Arabia said they will slash prices and increase production which has led to increased worry over a price war in the oil markets.
The international Brent crude oil futures contract fell 30 percent to $31.02 per barrel. This is this contract’s lowest price level since February 2016.
The U.S. West Texas Intermediate (WTI) crude oil futures contract shed 27 percent to trade at $30 per barrel at open. This is also its lowest price point since February 2016.
After the initial slump lower both contracts pare back some losses. The Brent contract is down 24.59 percent and the WTI contract is down 25.61 percent, at last glance.
Crude Oil Traders Digest Bad News from OPEC on Supply Cuts
On Saturday, Saudi Arabia announced they failed to reach a deal with the OPEC + nations regarding increased oil production cuts. In response the de-facto leader of OPEC said that they would offer a huge discount for selling prices in April.
Saudi Arabia will also increase production to above ten million barrels per day. Right now the oil rich kingdom pumps 9.7 million barrels per day. If they wanted to max out their output, they could pump 12.5 million barrels per day.
Financial and Oil Traders Worry about COVID-19 Headlines
The number of COVID-19, coronavirus, cased has topped 107,000 around the world. Also of concern, there are over 500 cases in the United States and over twenty death.
Italy has been ravaged. Their health system is under a great deal of stress as the spread of the contagion is overwhelming officials.
Over the weekend, Italy quarantined a quarter of their population until 3 April. Italy, the European Union’s third largest economy has been hard hit by the outbreak.