WASHINGTON (DTN) -- Oil futures on New York Mercantile Exchange and Brent crude on Intercontinental Exchange fell on Monday, as investors sorted through a barrage of bearish headlines over the weekend, including a four-day delay of an emergency meeting between the Organization of the Petroleum Exporting Countries and Russia-led partners, potential U.S. tariffs on imported crude oil and further downward revisions to demand forecasts as coronavirus lockdowns weighs on the global economy.
Goldman Sachs on Monday said oil demand this week would fall as much as 26 million barrels per day (bpd), more than a quarter of worldwide consumption. Against these projections, OPEC+ proposed cuts of some 10 million bpd would not be nearly enough to offset the seismic destruction in demand caused by the COVID-19 pandemic that has shut-in at least a quarter of the global economy.
"Even with output cuts equivalent of 10% of global supply, oil inventories would still rise by 15 million bpd in the second quarter" said International Energy Agency's Chief Fatih Birol.
Over the weekend, the 23-nation group of oil producers led by Saudi Arabia and Russia, known as OPEC+ alliance postponed a pivotal meeting from Monday until Thursday (4/9) and Saudi Arabia delayed releasing its Official Selling Price for May exports until after the virtual gathering. The group's closely-watched talks appear to have hit a snag after U.S. oil executives released no statement on coordinating production cuts after meeting with U.S. President Donald Trump on Friday.
The United States has sent mixed signals over its course of action. On Saturday (4/4) Trump administration threatened to impose taxes on foreign crude imports to protect domestic oil industry days after calling for coordinated action in oil markets.
"If we have to do tariffs on oil coming from outside or something to protect tens of thousands of energy workers in our great companies that produce these jobs, I will do what I have to do," Trump said in a press briefing.
OPEC+ wants producers from the United States and Canada to join a multilateral agreement on coordinated cuts. Reports indicate the Saudis and Russia will not make production cuts without cuts from North America. Texas oil regulators are debating whether to impose limits on the state's producers, though they won't decide until April 14, five days after the OPEC+ virtual meeting.
Analysts expect there will be unavoidable voluntary reductions from U.S. shale producers with or without extraordinary government action due to unfavorable market conditions. Baker Hughes reported Friday the U.S. oil rig count posted the largest weekly decline in five years, down 62 to 562 rigs, the lowest count since January 2017.
In early trading, May West Texas Intermediate futures fell $1.01 to trade near $27.37 per barrel (bbl) after closing at 2-1/2 week high $28.34 bbl on Friday. ICE Brent June contract declined a steeper $1.16 to near $32.96 bbl. Both crude benchmarks climbed over 30% last week in their first weekly advance in over a month. NYMEX RBOB May contract moved down 1.71 cents to near $0.6745 gallon, with the gasoline contract gaining 21% in value last week. NYMEX ULSD May contact slipped 0.42 cents to trade near $1.0664 gallon.
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