Oil drops on oversupply worries as Saudi Arabia, Russia delay meeting

OIL PRICE - SINGAPORE. Oil prices slipped on Monday, after Saudi Arabia and Russia delayed a meeting to discuss output cuts that could partly alleviate oversupply in global markets as the coronavirus pandemic pummels demand.

Brent crude slipped close to $30 a barrel in early trade and was at $33.45 by 0532 GMT, down 66 cents, or 1.9%. West Texas Intermediate crude fell 98 cents, or 3.5%, to $27.36 a barrel, after earlier touching a low of $25.28.

Late last week, prices surged, with U.S. and Brent contracts posting their largest ever weekly percentage gains due to hopes that OPEC and its allies would strike a deal to cut crude supply worldwide by at least 10 million barrels per day (bpd).

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Saudi Arabia and Russia were initially set to meet on Monday to discuss output cuts, but that has now been pushed to April 9, after they blamed each other for the collapse of talks in March.

It "just took a delay in the meeting between Saudi and Russia to knock the wind out of that rally", said Michael McCarthy, chief strategist at CMC Global Markets in Sydney.

U.S. President Donald Trump has said he will impose tariffs on crude imports if he needed to "protect" U.S. energy workers from the oil price crash that has been exacerbated by the war between Russia and Saudi Arabia over market share.

Prices on both sides of the Atlantic marked their worst month on record in March as the coronavirus pandemic crippled demand in a market flooded with supplies.

Production cuts could come "too little, too late" to support oil prices, ANZ and Citi analysts cautioned.

The head of the International Energy Agency has said oil inventories would still rise by 15 million bpd in the second quarter even with output cuts of 10 million bpd.

He urged the world's richest economies to discuss broader ways to stabilise oil markets.