Oil drops as oversupply woes infect investor sentiment

Oil fell on Monday morning in Asia, giving up its gains from the previous session.

Brent oil futures fell 2.18% to $24.27 by 9:45 PM ET (2:45 AM GMT) and WTI futures slid 7.32% to $15.70.

Both Brent and WTI futures rose during the previous session as Baker Hughes reported that American energy firms cut monthly production for April at levels not seen since 2015. Continental Resources, the largest oil producer in North Dakota, halted most of its production in the state.

Elsewhere in North America, Canadian drillers also slashed the number of active oil and gas rigs to a record low.

Meanwhile, major producer Russia announced plans to halve oil exports from its Baltic and Black Sea ports in May.

But for investors, the cuts may not be enough to combat the black liquid’s oversupply dilemma as the demand shrinkage from the COVID-19 virus does show little sign of recovery and global storage spaces fill up fast. With oil demand down by around 30%, energy firm Kpler estimated that 85%of onshore oil storage is already full.

Even OPEC members expressed doubts that OPEC+’s 10-million-barrel cut in daily production agreed upon two weeks ago, and scheduled to start on Friday, will make a dent.

“Despite the measures taken by OPEC, oil producers in various countries should be aware that they may be called to take more drastic measures,” Angolan Resources and Petroleum Minister Diamantino Azevedo, told Angola Press Agency on Friday. Angola is an OPEC member.

But investors hope that fuel sales will pick up pace later in the quarter in China as it eases lockdowns to curb the spread of the virus.

By Investing.com: https://www.investing.com/news/commodities-news/oil-dropsas-oversupply-woes-infect-investor-sentiment-2151600