oil rig

Oil futures slid on Tuesday as cratering demand from the coronavirus pandemic outweighed production cuts OPEC agreed on over the weekend. 

US West Texas Intermediate on Tuesday slid as much as 3.5% to $21.63 per barrel, declining for the third day in a row. International benchmark Brent crude fell about 1% to $31.18 per barrel. 

The sharp drop in oil consumption as airlines cut flights and consumers are encouraged to stay home and practice social distancing to curb the spread of COVID-19 has overshadowed OPEC’s historic production cuts. Over the weekend, the group agreed to slash production by 9.7 million barrels per day, the largest-ever coordinated output cut. 

The cuts agreed upon over the weekend will start in May, and represent about a tenth of global oil production. 

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On Monday, Saudi Arabia said that it would be open to further production cuts if necessary when the group and its allies meet in June. Still, the country would oil lower production only if others in the OPEC+ alliance also agreed to cuts, a long-standing policy of the kingdom. 

“We are still dealing with uncertainty related with the virus and its impact,” Prince Abdulaziz bin Salman said during a Monday conference call with reporters. “The will is there, and the structure is there.” 

He also said that current forecasts for oil demand may be too pessimistic. If that is the case, OPEC+ may not have to make any further cuts, he said.

Oil prices have declined as much as 64% this year as the coronavirus pandemic has slowed demand. 

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