After recovering at the end of last week, oil resumed falls on Monday. West Texas June futures stand at $ 13, down 23%, while those of Brent yield 7%, up to $ 23. Tensions between the US and Iran and rumors surrounding possible further production cuts by OPEC + buoyed crude late last week, but the problems remain huge and setbacks are reigniting.
West Texas futures cut out of fear that storage in Cushing, Oklahoma, can reach full capacity soon. US crude inventories increased to 518.6 million barrels in the week of April 17, close to the all-time record of 535 million barrels set in 2017.
The slump in demand to levels that the market is unable to compensate led West Texas futures from May to sink below zero early last week. The tension in the crude oil market is at maximum levels and it does not appear that the situation will improve in the short term.
Saudi Arabia, OPEC's main oil producer, started cutting production a little earlier than planned in order to send a message reassuring the market, but this has had no effect either. The kingdom has cut its production of 12 million barrels per day and will reach the agreed limit of 8.5 million barrels a day by May.
In the rush to cut production, the number of drilling rigs in the United States has dropped to the lowest level since July 2016, while the total number of oil and gas platforms in Canada has fallen to the lowest level since 2000, according to data from Baker Hughes.
Kuwait and Azerbaijan are coordinating the cuts, while Russia is set to halve its western maritime exports in May.