Oil Prices Plunge to $30 Despite 13.4mbpd Cut

• Oil Prices Plunge to $30 Despite 13.4mbpd Cut

Despite efforts by both the Organisation of the Petroleum Exporting Countries (OPEC) and non-OPEC to reduce global oil glut and artificially prop up oil prices, oil prices plunged during the Asian trading session on Monday.

In an aggressive move to curb the negative impact of COVID-19 on the oil market, the US, Brazil and Canada had joined OPEC+ to announce a combined 13.4 million barrels per day production cut on Sunday.

The historic agreement failed to prop up oil prices as anticipated as Brent crude oil against which Nigerian oil is priced, declined from $33.17 per barrel to $30.69 per barrel.

The US West Texas Intermediate (WTI) also dropped from $24.63 a barrel to $22.02 on Monday.

Traders have said top oil producers need deeper production cut to reduce what they estimated at 35 million barrels per day oil surplus. Although OPEC Secretary-General, Mohammad Barkindo, had put the global oil surplus at 14.7 million barrels per day in the second quarter, the current market reaction support traders’ position.

On Sunday, sources from OPEC+ said the cartel remains optimistic that the G20 energy ministers would join in production cuts to reduce global oil gluts and stabilise the oil market. However, G20 remains silent despite holding a virtual meeting on Friday.

Experts have said without a COVID-19 cure to allay investors’ fears, any stimulus package will remain ineffective.