CNBC’s Kelly Evans and Ryan Sitton, Texas Railroad Commission official in charge of regulating oil production in the U.S., break down what’s happening in the energy market.
Oil prices turned negative on Thursday, giving back a more than 12% gain, as the Street awaited details on production cuts from OPEC and its allies, known as OPEC+. An extraordinary meeting between the oil-producing nations, which kicked off around 10:45 a.m. ET, remains ongoing.
Producers were reportedly amenable to scaling back production in an effort to prop up falling oil prices, although traders were skeptical that an agreement on a cut large enough to combat the coronavirus-induced demand decline would be reached.
Saudi Arabia and Russia were reportedly discussing cuts that could take a record 20 million barrels per day of global production offline, Reuters said, citing sources familiar with the matter, although others said the cuts would more likely be around 10 million barrels per day.
According to Reuters, OPEC+ would cut output by 12 million barrels per day, with an additional 5 million barrels per day cut by producers outside of the group. The deal would reportedly last for two years with the cuts implemented gradually, Reuters said.
Oil prices reversed course and turned negative as traders awaited confirmation of the cuts as well clarity on key details, including how the cuts would be divided among OPEC+, as well as the production numbers on which the cut would be based.
U.S. West Texas Intermediate fell 9.6% to trade at $22.69 per barrel, after earlier jumping more than 12% to trade at $28.36. International benchmark Brent crude slipped 4.5% to trade at $31.35, after earlier hitting a high of $36.40.
“Covid-19 is an unseen beast that seems to be impacting everything in its path,” OPEC Secretary General Mohammad Barkindo said at the meeting. “For the oil market, it has completely up-ended market supply and demand fundamentals since we last met on 6 March,” he added.
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