Oil Slides Further on Fears of Oversupply

Oil prices have sunk this week, amid growing fears that Opec+'s historic deal on production cuts from next month goes nowhere near far enough to rebalance the market, following a collapse in fuel demand.

As of press time, Brent crude had shed 3.5% of its value to $28.50/barrel, adding to further losses on April 14. Its US counterpart West Texas Intermediate (WTI) was down 2.6% at $19.60/b.

Russia, Saudi Arabia and other producers in the Opec+ alliance agreed on April 12 to take 9.7mn b/d of oil supply off the market, to mitigate against the demand destruction in industry and transport caused by Covid-19 lockdown measures. This demand destruction is expected to reach its height this month, with Norway's Rystad Energy predicting a 28mn b/d loss in fuel demand.

Opec+ has called on other producers such as Brazil, Canada, Norway and the US to curb their output as well, but none of them has committed to implementing cuts. However, not all producers can afford to keep pumping at such low prices, which will mean a voluntary reduction at many fields.