New York                   -             Crude oil benchmarks opened the month mixed on Wednesday, following their biggest-ever quarterly and monthly losses, overshadowed by fears of global oversupply as data showed a bigger-than-expected rise in inventories in the United States.

Brent crude was down by 2.1 percent at $25.81 a barrel, while US West Texas Intermediate crude was up by 0.1 percent at $20.50 a barrel, erasing most of a 1.3 percent gain.

US crude inventories rose by 10.5 million barrels last week, far exceeding forecasts for a 4 million barrel build-up, data from industry group the American Petroleum Institute showed.

Wednesday’s opening session left oil prices marooned near their lowest levels since 2002 amid the global coronavirus crisis that has brought a worldwide economic slowdown and slashed oil demand. Crude futures ended the quarter down nearly 70 percent after record losses in March.

The bearish mood in the market was not improved by a rift within the Organization of the Petroleum Exporting Countries (OPEC). Saudi Arabia and other members of OPEC were unable to come to an agreement on Tuesday to meet in April to discuss sliding prices.

“It is very unlikely that OPEC, with or without Russia or the United States, will agree a sufficient volumetric solution to offset oil demand losses,” BNP Paribas analyst Harry Tchilinguirian said in a report.

A news agency survey of 40 analysts forecast Brent would average $38.76 a barrel in 2020, 36 percent lower than the $60.63 forecast in a February survey.

Oil drew some early buying on Tuesday after US President Donald Trump and his Russian counterpart Vladimir Putin agreed to talks on stabilising energy markets.

Trump said he would join Saudi Arabia and Russia, if need be, to discuss the sharp fall in oil prices resulting from a price war between the two countries.

“The two countries are discussing it and I am joining at the appropriate time if need be,” Trump told reporters at the White House, adding that he had had “great” talks in separate conversations with Saudi Crown Prince Mohammed bin Salman (MBS) and Putin.

Markets have been in turmoil for more than three weeks. Early in March, prices fell sharply after Saudi Arabia and Russia were unable to come to an agreement to curb supply. Prices fell even more as demand fell during the worsening coronavirus pandemic. More than 800,000 people have been infected and more than 39,000 have died.

Oil market held ‘hostage’

Also on Tuesday, US Energy Secretary Dan Brouillette spoke with his Russian counterpart Alexander Novak about the slump in global oil markets, and they agreed to hold future discussions involving other large world oil producers and consumers, the US Energy Department said in a release.

Saudi Arabia, de facto leader of OPEC, remains at loggerheads with Russia, which had allied with OPEC to curb output for more than three years beginning in late 2016. The Saudis plan to boost oil exports to 10.6 million barrels per day (bpd) from May, just as global consumption crashes due to the coronavirus.

Weakness in futures markets has been surpassed by the physical markets, where cargoes are selling at single digits in key markets like Canada, Mexico and Europe, reflecting expectations for the coming collapse in demand that will strand barrels of oil.

“COVID-19 has taken the oil market hostage,” said Michael Tran, managing director of energy strategy at RBC Capital Markets in New York.

“The unprecedented pace of demand destruction has forced the hand of refineries, on a global level, to issue run cuts, leaving barrels from the US to the North Sea, to Asia searching, often unsuccessfully, for homes.”

Fuel demand is expected to fall sharply in coming months, with Trafigura’s chief economist predicting a 30 percent drop in demand. Worldwide aviation is basically shut down and motorists are staying off the roads.

“It’s just a matter of time before we see the producers be forced by the crude gatherers to cut as one cannot ‘gather’ crude when there are no buyers or tanks to store it in,” said Scott Shelton, energy specialist at United ICAP.

US crude output fell to 12.7 million bpd in January from 12.8 million bpd in December, the US Energy Information Administration (EIA) said in a monthly report on Tuesday.

That was the first time since July 2019 that US crude output has declined two months in a row. Goldman Sachs anticipates that US supply will fall by roughly 1.4 million bpd by the third quarter of 2021 to deal with falling demand.