Crude oil prices started falling again Friday, after a record jump the day before, as doubts grew over Donald Trump's statements announcing the end of the price war between Russia and Saudi Arabia. WTI's US barrel for May delivery fell 4.3% to 24.23 dollars in Asian trade at around 3:20 GMT. The price of a barrel of Brent North Sea crude for June delivery was down 3.17% to 28.99 dollars.
Brent crude jumped nearly 50% on Thursday and WTI soared 35% just after tweets from the President saying “hope and expect” that Moscow and Ryad will cut production to 15 million. The two barrels recorded the largest percentage increase over a session in their history: + 25% for WTI and + 21% for Brent.
Just spoke to my friend MBS (Crown Prince) of Saudi Arabia, who spoke with President Putin of Russia, & I expect & hope that they will be cutting back approximately 10 Million Barrels, and maybe substantially more which, if it happens, will be GREAT for the oil & gas industry!
– Donald J. Trump (@realDonaldTrump) April 2, 2020
Crude markets have been feverish since the start of a price war two weeks ago between Saudi Arabia and Russia, following a disagreement over the strategy to support prices. Saudi Arabia has opened the floodgates of its production and turned prices down in the hope of bending Russia.
Kremlin scathing denial
At the same time demand has melted, while the coronavirus crisis and drastic measures to restrict movement put in place by the states paralyze economic activity on a large part of the globe. Donald Trump said his announcement follows an interview with “(his) friend MBS (Crown Prince) from Saudi Arabia, who spoke with President Putin.”
But the Kremlin immediately denied that such a conversation had taken place. Saudi Arabia called for an “urgent” meeting of the Organization of the Petroleum Exporting Countries (OPEC) and other countries, including Russia, to stabilize the market, but one day after the kingdom increased production at a record level.
Analysts have been skeptical that an agreement is in sight. The Bloomberg agency quoted a close source estimating that the objective of Donald Trump was wishful thinking. “It would of course be an important event, even in a context of massive overproduction of 25 million barrels per day that are arriving on the market at the moment,” said Magnus Nysveen, chief analyst of the specialist consultancy Rystad Energy, cited by Bloomberg. But the deal “seems too good to be true,” he said.