NEW YORK (Reuters) - Oil prices plunged around 5% on Tuesday as investors doubted that record OPEC+ supply cuts would soon balance markets as demand plunges due to the coronavirus pandemic.
Brent crude futures LCOc1 fell $1.60, or 5%, to $30.14 a barrel by 11:23 a.m. EDT (1523 GMT). U.S. West Texas Intermediate (WTI) crude CLc1 was down $1.25, or 5.5%, to $21.15 a barrel.
Global oil producers worldwide are expected to cut overall output by roughly 19.5 million barrels per day, or nearly 20% of world supply.
However, those commitments - which include voluntary cuts that will happen gradually in places like the United States - will not be enough to reduce the growing worldwide supply glut. Oil prices remain more than 50% down this year.
“With demand destruction forecasts ranging from 15 million to 22 million bpd in April 2020 and these measures not even coming into place until May, we are likely to see a substantial overhang in the short-term,” said Nitesh Shah, director of research at New York-based WisdomTree Investments.
The bulk of the mandated reductions come from the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+. That group agreed this weekend to cut output by 9.7 million bpd in May and June. The rest from the United States, Canada and others, will come as a result of weak pricing and happen over time.
As a result, physical markets where crude is traded, such as in Houston or London, suggest prices will not recover for a while as storage fills.
Enterprise Products Partners (EPD.N) said it was making an existing line available to ship
