Oil Market Continues To Leak, Analyst Says It Needs Rebalancing
Oil prices continued to fall on Monday, reaching an 18-year low as Saudi Arabia and Russia failed to agree on the scale of production and the coronavirus pandemic continued to depress demand.
Analyst: Oil Market Needs Rebalancing
“The global oil surplus is increasing fast and refineries are rapidly shutting down because they either lose money for every barrel they process, or they have nowhere to put their oil products,” Bjarne Schieldrop, the chief commodities analyst at SEB, said in a statement.
More and more on-shore oil producers are facing prices of zero to $10 per barrel or even negative prices, the analyst said.
“Damage today implies less production tomorrow once we have put COVID-19 behind us and the world is brimming with fiscal and monetary stimulus.”
The oil market needs rebalancing, Schieldrop said, adding that the magnitude of the surplus is still rising, inventories are rising even faster and oil prices will head even lower.
Russia, Saudi Arabia's Oil Price War
At the March 6 Organization of the Petroleum Exporting Countries meeting, Russia refused to sign up to additional cuts proposed by OPEC oil producers. Saudi Arabia decided to increase its oil production and launched an oil price war that triggered a major fall in the price of oil,.
On Monday, President Donald Trump told "Fox & Friends" that he will be speaking with Russian President Vladimir Putin and discussing oil and other matters.
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