Crude oil futures slump on further signs of increasing supply

Singapore — 0310 GMT: Crude oil futures tumbled in mid-morning trade in Asia Thursday as signs of a further increase in supply emerged from OPEC producing countries.

At 11:10 am Singapore time (0110 GMT), ICE Brent May crude futures were down $2/b (5.6%) from Wednesday's settle at $33.79/b, while the NYMEX April light sweet crude contract was $1.84/b (5.6%) lower at $31.14/b.

Analysts said that further selling emerged amid signs of more OPEC supply, following the collapse of the OPEC+ agreement last Friday.

On Wednesday, Abu Dhabi National Oil Co, the UAE's biggest producer, said that it is able to supply the market with over 4 million b/d of crude in April and is speeding up plans to boost capacity to 5 million b/d.

Saudi Aramco also said that it plans to bring 12.3 million b/d into the market, after producing 9.68 million b/d in February.

"The battle for market share continues... The situation remains fluid and appear to have deviated away from economic reasoning at the moment," OCBC analysts said Thursday.

"It is premature to speculate that this price war will be short-lived," the analysts added.

Saudi Arabia's decision to slash its crude oil prices over the weekend had added pressure on other Middle East producers to follow suit or risk losing market share, setting the stage for a price war in the region.

Crude futures nosedived 24% on Monday, in the market's worst one-day loss in some 30 years, after Saudi Arabia's weekend decision.

Meanwhile, US crude production showed no signs of faltering. EIA reported Wednesday that US crude production averaged 13 million b/d last week, just 100,000 b/d off the prior week's record.

Net crude inputs were flat at 15.7 million b/d, likely pushing US crude inventories up 7.66 million barrels last week to 451.8 million barrels.

Broader markets are also likely to take a hit following Trump's announcement to suspend travel from Europe to the US for the next 30 days.

"Over and above the pandemic classification, President Donald Trump's latest announcement to suspend all travel from Europe once again adds to economic impact expected to be felt by the US," IG's market strategist Pan Jingyi said.