Monday, 13 Apr 2020 01:35 PM MYT
The morning after the Organization of the Petroleum Exporting Countries and allies led by Russia agreed to reduce output by 9.7 million barrels per day in May and June ― equal to nearly 10 per cent of global supply ― prices gained less than 5 per cent and are still 50-60 per cent down for the year so far.
“Even if these cuts provide a floor to prices they will not be able to boost prices given the scale of inventory builds we are still staring at,” Energy Aspects analyst Virendra Chauhan said, referring to storage tanks and ships around the world the are filling up fast amid the slide in demand from end-users.
Meanwhile analysts said that while the core number in the deal suggests a near 10 million bpd cut, Middle East producers like Saudi Arabia, the United Arab Emirates and Kuwait will likely have to reduce by more than the 23 per cent cut to which they signed up, as they had begun to ramp up output in April amid a price war before the agreement was struck.