OIL FUTURES: Crude slumps on OPEC+ meeting delay, lack of US commitment

New York — Oil futures fell Sunday evening following news that an emergency OPEC+ meeting planned for Monday was delayed because of a clash between Saudi Arabia and Russia, and a lack of commitment from the US on possible output cuts.

At 2206 GMT, NYMEX front-month crude futures were trading around $25.85/b, down $2.49 from Friday, while ICE front-month Brent was trading around $31.46/b, down $2.65.

The meeting, now scheduled for Thursday, was called to discuss production cuts in order to bolster crude prices, which have tumbled as the coronavirus spread has slashed demand.

Ministers had been considering a 10 million b/d cut, contingent on the US and other countries, such as Canada and Brazil, joining in. US President Donald Trump initially said last week he expected a production cut agreement of 10 million-15 million b/d.

The planned meeting, and Trump's comments, rallied crude markets late last week, with WTI at Midland, Texas assessed by S&P Global Platts at $23.89/b Friday, up $8.63/b from Wednesday.

However, Trump said late Friday after meeting with the heads of several US oil companies that he was not inclined to force them into mandatory output cuts.

Some shale operators, facing layoffs and potential bankruptcy, had urged the president to broker a deal that would bring them relief, but other oil companies opposed joining forces with OPEC.

"These are great companies and they'll figure it out," Trump said in a press briefing. "It's a free market."

On Saturday, Trump threatened oil import tariffs, claimed Russia, Saudi Arabia and other OPEC nations would be "destroyed" if they did not reach a new supply cut deal, and leveled his harshest criticism of OPEC since he was elected in 2016.

Trump is likely to continue to talk with the leaders of Saudi Arabia, Russia and other oil-producing countries about the next possible steps as the OPEC+ meeting nears.

Russia still supports talks with other leading oil producers on stabilizing the market, Kremlin spokesman Dmitry Peskov said Sunday.

"Russia was not a supporter of ending the OPEC+ deal. President Putin and the Russian side are overall inclined towards a constructive negotiation process, there is no alternative for stabilizing the international energy market," Peskov said during an interview aired on the Russia 1 TV Channel.

In recent days, officials from Russia and Saudi Arabia have criticized each other. On Friday Russian President Vladimir Putin said that Saudi Arabia is boosting production to target US shale oil companies, while Russia is not interested in taking US market share.

Saudi officials said the comments were "categorically false and contrary to fact" and that Saudi Arabia is a major investor in the US energy sector.

Even with OPEC and its allies returning to the table Thursday, It remains to be seen how a 10 million b/d crude production cut will be realized without US producers cutting.

"The matter is complicated by the fact that US production has not yet fallen significantly, despite dramatic capex cuts, which will only affect significant declines in 2021," S&P Global Platts Analytics said. "This raises questions over how and when the US would cut, whether these would be economic (such as the 800,000 b/d of stripper wells in our forecast) or voluntary, with the latter further complicated by the legal independence of US producers."

Norway's energy minister Saturday said her country would consider cutting output. Norway produced 2.1 million b/d of oil in February, roughly between 2% and 3% of global production.