"Today Will Be A Regretful Day" - Oil Prices Have Collapsed After OPEC+ Talks End Without A Deal

Update (1115ET): Oil prices are utterly collapsing after the OPEC+ talks have ended with no agreement on current or further production cuts and very terse communique.

Saudi Oil Minister Prince Abdulaziz bin Salman is quoted by delegates as having said inside the OPEC+ meeting that “today will be a regretful day.”

WTI is down 9%, trading with a $41 handle!

And Brent is trading with a $45 handle...

Note that there were roughly three bullish oil speculators for every short last time the data were reported, ahead of this news.

Or put another way - Russia just snubbed the Saudis...

And, in fact, Bloomberg's Javier Blas remarked: "the draft communique read like divorce papers."

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Update (1015ET): Reports, citing a delegate, for the first time in six years, OPEC ends talks in Vienna without a deal. being agreed. Oil prices are extending their collapse...

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Update (0950ET): Bloomberg reports that OPEC+ talks "are on the verge of collapse" as it becomes clear that Russia will not agree (and in fact disagrees with their usefulness) to further production cuts, and in fact will not agree to extend the duration of the current production cuts.

WTI just hit a $42 handle...

Some context for just how bad this is...

And OPEC+ have been "managing" this for years?

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Update (0815ET): Russia says it is ready for a decline in oil prices. It said OPEC+’s proposed deeper production cuts aren’t a solution to rebalancing the global oil market amid a collapse in demand.

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Brent crude futures tumbled by more than 4% on Friday after Reuters reported that Russia had rejected steep production cuts by OPEC to prop up oil prices amid the Covid-19 outbreak triggering demand shocks in China and across the world. 

A high-level Russian source told Reuters that Moscow has no interest in backing an OPEC reduction that calls for extended cuts and would only agree to existing cuts that OPEC already agreed on. 

OPEC has held several days of talks in Vienna, Austria, backing an additional 1.5 million barrels per day (bpd). However, it has failed to bring Russia on board. OPEC wants non-OPEC to contribute 500,000 bpd to the overall cut. The new deal would mean OPEC+ would cut a total of 3.6 million bpd, a move that would hopefully lead to a rebalancing in the global oil market in the second half of the year. On Russain disappointment, Brent crude futures dropped to its lowest level since July 2017, trading at $47.70 a barrel, or down 4.5% on Friday morning.

Another source, this time with Bloomberg, said that Russia wants OPEC+ to sustain current output cuts until June. It would then be at that time where more data about market imbalances could be assessed and corrected, the person added. 

With Russia taking a "tough stance" on the proposed additional cuts, Commerzbank says Brent futures could extend declines to $40 per barrel. However, if Russia agrees to further cuts, Brent futures would jump to $60 in weeks. 

Goldman Sachs maintained its Brent price forecast of $45 per barrel in April. 

"Ultimately, a rebound in demand, not supply cuts, will be the necessary catalyst for a sustainable rebound in prices," Goldman said. 

ANZ said global oil consumption is likely to crater in 1H20, with expectations of a 1.6 million bpd decline and contract 300,000 bpd on the year. 

"Growth may return in H2 (second half of 2020) but is unlikely to be enough to offset the losses," ANZ said. 

As one OPEC delegate said Friday, there's "no OPEC+ deal in sight at the moment," suggesting that a bottom in oil prices has yet to be seen.