By Sharon Cho and Alex Longley
Despite the president’s optimism, Saudi Arabia has shown few signs of relenting in its bid to flood the market. On Wednesday, the kingdom said it was pumping at a record and had this week loaded almost 19 million barrels of oil in a single day. Riyadh insists it will only back down if all the top producers — including the U.S. — agree to cut production. But Russia’s Vladimir Putin doesn’t plan to speak with Saudi Arabia in the coming days, the Kremlin said.
“When it comes to potential cuts, an OPEC+ deal would likely not be enough; we would need to see action which includes the likes of the U.S.,” said Warren Patterson, head of commodities strategy at ING Bank NV. “The sheer size of the surplus should put downward pressure on the market as we move through the quarter.”
China’s move to purchase oil for its strategic reserves comes as the physical crude market shows deepening signs of strain. Dated Brent, the benchmark for two-thirds of the world’s physical supply, was assessed at $15.135 on Wednesday, the lowest since at least 1999. Crude has slipped below $10 in some areas including Canada and shale regions in the U.S., Belarus wants to buy Russian oil for $4, while some grades have posted negative prices.
As supply balloons, there are growing signs that the world is running out of places to store the glut. Tanks at one of the largest storage hubs, at South Africa’s Saldanha Bay, are already almost full.