U.S. crude falls below $30 as Fed move fails to calm markets
U.S. crude fell below $30 on Monday as emergency rate cuts by the U.S. Federal Reserve and its global counterparts failed to tame markets and China’s factory output plunged at the sharpest pace in 30 years amid the spread of coronavirus.
Brent crude was down $2.89, or 8.5%, to $30.96 a barrel by 1012 GMT. The front-month price had risen $1 earlier in the session.
U.S. West Texas Intermediate (WTI) crude was at $29.94, down $1.79 or 5.6%.
Brent’s premium to WTI is close to its narrowest since 2016, making U.S. crude oil uncompetitive in international markets.
U.S. President Donald Trump said on Friday that the United States would take advantage of low oil prices and fill the nation’s emergency crude oil reserve, in a move aimed to help energy producers struggling from the price plunge.
Oil prices have also been under intense pressure on the supply side, as top exporter Saudi Arabia ramped up output and slashed prices to increase sales to Asia and Europe.
This month, the Organization of the Petroleum Countries (OPEC) and Russia failed to extend production cuts that began in January 2017 aimed at supporting prices and lowering stockpiles.
Although there was a massive drop in both oil and natural gas prices last week, the U.S. oil drilling rig count rose for a second week in a row to its highest since December, energy services firm Baker Hughes Co said on Friday.
The number of rigs is expected to fall, however, as producers deepen spending cuts.