Oil price is having the worst loss since Gulf War in 1991, on fear of price war after OPEC+ talks ended in dramatic failure. It’s reported that Saudi Arabia wanted to slash production to offset the steep decrease in demand due to coronavirus pandemic. But Russia rejected the idea, arguing that cheap crude will help wipe out competition from US shale.
As the talks collapsed, it’s reported that Saudi Arabia plans to boost output next month to well above 10 million barrels a day, or even to 12 million barrels. That’s seen as an act of a full price war between OPEC and Russia, to force the latter to go back to the negotiation table.
WTI crude oil hits as low as 27.50 today, breaching 2016 low of 27.69. At this point, we’re not expecting sustainable trading below 27.69 yet, unless the situation worsen dramatically. There is prospect of a rebound should Russia comes back to negotiation. But any rebound attempt will likely be capped below prior resistance at 42.05.
