Although it had been promised to cut production from May 1, as local stocks have not risen as much as expected due to the shortage of storage, US crude oil prices fell to a level of around 3% lower on Tuesday
Markets are backed with the hope that demand will recover after some officials have announced that the restrictions on coronavirus have been eased. At least 16 US states seem ready to start working again, but Britain says it is very dangerous to relieve measures with a second outbreak fear.
West Texas Intermediate (WTI) crude was down 44 cents, or 3.4%, at $12.34 a barrel. The contract plunged 25% on Monday.
Global benchmark Brent crude settled up 47 cents, or 2.3%, at $20.46 a barrel, following a 6.8% slide on Monday.
Transportation sources point to the industry’s desperation for where oil can be stored, saying oil traders are hiring expensive ships to store products or transfer fuel overseas.
Texas energy regulators, in line with the concerns about legal imperatives, will vote next week on a controversial proposal that the government will take to reduce oil production.
As the crude oil production of the USA continues to decrease, shale oil producers are having trouble with the purchase contracts which are over.
BP’s global oil demand is expected to drop about 15 million barrels (bpd) per day due to movement restrictions on coronavirus in the second quarter.
This is a cut off, over the 10 million bpd, accepted by the Organization of the Petroleum Exporting Countries (OPEC), Russia and other allied producers for instance.
OPEC oil supply in April was at its highest level since December 2018. Reductions are expected to be implemented from May 1st. Oil markets are expected to begin to stabilize after the agreement comes into force. However, a significant increase in prices is not expected in the near future due to high levels of global storage activities.