Prices had risen at the end of last week, both WTI and Brent contracts set a record with their weekly highest percentage gains according to the hope that OPEC and its allies would make a global deal to cut supply worldwide.
Saudi Arabia and Russia would initially meet on Monday to discuss supply cuts, but this was postponed to 9 April, as they blamed each other for the collapse of negotiations in March. Thereafter the new date mentioned, oil prices dropped on Monday.
The delay in the meeting, which is planned to be held on Thursday under the leadership of Saudi Arabia through videoconferencing, may also mean giving a call and time for other producers to join the process and take the responsibility.
Brent crude LCoc1 slipped close to $30 a barrel earlier but pared losses to trade down 24 cents, or 0.7%, to $33.87 a barrel by 0639 GMT. West Texas Intermediate crude CLc1 fell 41 cents, or 1.5%, to $27.93 a barrel, off a session low of $25.28.
The decline in global demand due to the coronavirus pandemic and global deadlocks is said to be greater than the cuts proposed by the OPEC + alliance. Cosidering the prices on both sides of the Atlantic, as a result of the oil glut with the market caused by the coronavirus pandemic, oil recording its worst month in March. According to the rumor that oil stocks may not improve even with 10 million bpd production cuts designed for the second quarter and may increase by 15 million bpd.
In the short term, low prices may cause some players to leave the industry, in which case the parties are likely to stabilize. It is very likely that those who will be most affected by this situation are producers of shale.
In addition, US energy companies are likely to experience a coronavirus-induced collapse. Considering current economic crisis and fuel demand, it would be logical to cut drilling spending.