Oil prices plunge after OPEC+ talks break down

But stocks rose on Monday on hopes that the coronavirus is abating as daily death tolls fall across Europe.

    US President Donald Trump said he would enact tariffs if necessary to support the US oil industry, as global oversupply and falling demand due to the coronavirus sink oil prices [File: Angus Mordant/Reuters]
    US President Donald Trump said he would enact tariffs if necessary to support the US oil industry, as global oversupply and falling demand due to the coronavirus sink oil prices [File: Angus Mordant/Reuters]

    Oil prices skidded on Monday after negotiations between Saudi Arabia and Russia to cut output were delayed, keeping oversupply concerns alive, while stocks jumped as investors were encouraged by a slowdown in coronavirus-related deaths and new cases.

    Brent crude fell as much as $3 in early Asian trading after OPEC, a group of main oil-producing countries led by Saudi Arabia postponed a meeting over a potential pact to cut production to Thursday.

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    The producers were initially set to meet on Monday, but that has now been pushed to April 9, after they blamed each other for the collapse of talks in March, with Saudi Arabia making a diplomatic attack on Russian President Vladimir Putin. 

    Investors previously hoped that the meeting would have resulted in cuts to oil production of about 10 million barrels per day.

    "We continue to believe that it is going to be difficult for producers to agree on cuts, particularly in the region of 10 to 15 million barrels per day," according to a commodities note from ING.

    "Anything less than this would likely disappoint the market, given growing expectations last week, along with the deteriorating demand picture," Warren Patterson, ING head of commodities strategy and Wenyu Yao, ING senior commodities strategist said.

    "The deal really hinges on the United States though, with Russian participation dependent on the US contributing to cuts," they said.

    US President Donald Trump said he would impose tariffs on crude imports if that is needed to support the US oil sector.

    Brent crude slipped close to $30 a barrel in early trade and was at $32.82 by 02:03 GMT, down $1.29, or 3.8 percent. West Texas Intermediate (WTI) crude fell $1.66, or 5.9 percent, to $26.68 a barrel, after earlier touching a low of $25.28.

    Analysts said the news could lead to some sell-off in currency markets too, although movements are still being dictated by the spread of the coronavirus pandemic.

    The United Kingdom's pound sterling fell after Prime Minister Boris Johnson was admitted to the hospital following persistent coronavirus symptoms.

    Also weighing on the pound were fears other senior government officials who were in the same briefing as Johnson could be affected by the virus, said Karl Schamotta, chief market strategist at Cambridge Global Payments in Toronto, Canada.

    The pound fell 0.4 percent in early trade on Monday in a knee-jerk reaction and was last down 0.3 percent at $1.2222.

    Virus concerns

    "It is stating the obvious to say the viral outbreak and the containment measures to fight it are central to market action," said Michael McCarthy, chief market strategist at CMC Markets.

    Indeed, equity investors looked at the positives with leading European nations including France and Italy reporting lower death rates.

    US stock futures jumped more than 1.5 percent in early Asian trading on Monday after US President Donald Trump expressed hope the country was seeing a "levelling off" of the coronavirus crisis.

    The gains came despite New York Governor Andrew Cuomo cautioning that it was not yet clear whether the crisis in the state had reached a plateau. Investors took solace from the fact that COVID-19 cases appeared to be reaching a peak in Europe with Italy seeing the number of patients in intensive care falling for the second consecutive day.

    In Asia, Australia's benchmark index added 0.5 percent, Japan's Nikkei was up 0.2 percent while South Korea's KOSPI index climbed 1.4 percent.

    That left MSCI's broadest index of Asian shares outside of Japan up 0.1 percent. China markets were closed for a public holiday.

    "Focus in markets will now turn to the path out of lockdown and to what extent containment measures can be lifted without risking a second wave of infections," National Australia Bank analyst Tapas Strickland wrote in a note.

    "Key to a strong rebound in China will be the continuing lifting of containment measures with Wuhan - the epicentre of the outbreak - set to lift containment measures on April 8."

    Strickland, however, noted many in China were still subject to social distancing and isolation restrictions to prevent a resurgence in infections.

    The pandemic has killed more than 64,000 deaths as it further exploded in the US and the death toll climbed in Spain and Italy, according to a Reuters news agency tally.

    Concerns about heavy damage to the global economy have pushed investors into the perceived safety of government bonds where yields are at or near all-time lows.

    Elsewhere in currencies, the US dollar was up a touch against the yen at 108.58.. The euro was barely moved at $1.0803 while the risk-sensitive Australian dollar was up 0.2 percent at $0.6004.

    Spot gold was down 0.2 percent at $1,612.9 an ounce.

    SOURCE: News agencies