Oil prices drop, as US-Saudi deal put on back-burner
Oil prices plunged again on Wednesday as a possible production deal between the US and Saudi Arabia was put on hold, according to news agencies.
Brent fell by 1.8 percent to $25.88, while U.S. West Texas Intermediate crude was down to $20.6, according to Reuters, despite a brief rise in prices on Tuesday.
An oversupply in the market has continued to hammer prices with Saudi Arabia and other OPEC members unable to reach an agreement on cutting oil production, on Tuesday.
US crude inventories went up by 10.5 million barrels last week, way above the 4 million barrels projected in forecasts.
It comes on the back of a "price war" between Russia and Saudi Arabia, over an alleged disagreement on production. Sustained low prices though would likely see North American oil companies hit hardest.
Demand for oil across the world has also plummeted due to the coronavirus outbreak, which has seen hundreds of thousands infected and billions under lockdown.
US and Russian leaders have held talks to look at ways of dealing the crisis, but are yet to agree on a strategy.
An oversupply in the market has seen storage tanks at full capacity and prices plunge to an 18-year low.
The US government is looking at leasing storage space to oil companies to boost their capacities.
Prospects of collaboration between the US and Saudi Arabia over oil supplies have also been put on ice, according to the news agency.
A US-Saudi partnership might serve as an alternative to the OPEC, which has seen disagreements between members of the oil cartel and with non-member Russia regarding production.
"[It] has been floated but not at the stage of something that is being seriously considered," a source told Reuters.
US Secretary of State Mike Pompeo and Energy Secretary Dan Brouillette have also reportedly proposed the OPEC alternative plan to President Donald Trump, but no decision was reached.
Oil prices have crashed to a 18-year low and there are few positive signs for the market, with the continued spread of the coronavirus set to hit demand and likely lead prices continue to tumble.
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