By Peter Nurse
Investing.com – U.S. gasoline prices fell to their lowest on record on Monday, after aggressive moves by the Federal Reserve Sunday failed to calm panicking investors, while Saudi Arabia kept up the pressure on rival producers by promising record levels of oil sales through the rest of the year.
At 6:35 AM ET (1235 GMT), gasoline RBOB futures futures traded at a little under 73 cents a gallon, down 18% on the day and just off an intraday low of 69.06c.
The Federal Reserve held an emergency meeting Sunday, cutting short-term rates to nearly zero, while announcing at least $700 billion in purchases of Treasuries and mortgage-backed securities in coming weeks.
However, this has done little to assure investors seeing countries lock down borders, while stores, stadiums and casinos close, airlines slash flight schedules and cruise liners suspend operations.
Also of note are the latest economic data showing the impact from the virus on the world’s second-largest economy and the largest importer of oil. China’s factory production plunged 13.5% in January-February from the same period a year earlier. That was the weakest reading since January 1990 when Reuters records started, and a sharp reversal of the 6.9% growth in December.
On the supply side, a technical meeting between OPEC and non-OPEC members planned for Wednesday in Vienna has been called off, Reuters reported Monday.
In addition, newswires reported Saudi Aramco (SE:2222) CEO Amin Nasser as saying that the company intends to sell 12.3 million barrels a day of crude on average through the end of the year. Before the collapse of the so–called OPEC+ pact on March 6, it had been producing under 9.7 million b/d.
“Clearly the oil market has ignored the emergency rate cut from the US Fed over the weekend,” said analysts Warren Patterson and Wenyu Yao at ING, in a research note,
“The breakdown in the OPEC+ deal could not have come at a worse time, with the market already having to deal with a demand shock. The surge in supply expected from April, along with the demand hit, does mean that the global oil market is set to see a significant surplus over 2Q20, suggesting that this current weakness is likely to persist through 2Q20.”
Oil Slumps; Gasoline Hits All-Time Low; Crude Falls Below $30/Bbl
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