Oil surrendered gains after rising in early trading yesterday as investors weighed whether an unprecedented deal by the world's biggest producers to cut output would steady a market reeling from the coronavirus.
Futures in London were down 0.6pc after the Opec+ alliance agreed to slash production by 9.7 million barrels a day (bpd) starting in May. The group reached a deal following days of intense negotiations after Mexico declined to endorse the original agreement reached Thursday.
The US, Brazil and Canada will contribute an additional 3.7 million barrels in nominal production cuts as their output declines, and other G20 nations will cut 1.3 million more. Those numbers don't represent real voluntary cuts but rather the impact that low prices have already had on output, and they would need months to take effect.
Saudi Aramco reduced pricing for all its grades to Asia, signalling the state company's intention to defend sales in its biggest market even while paring output.
"The global market remains very oversupplied, and Aramco is still prepared to fight for its market share," said Ole Sloth Hansen, head of commodities strategy at Saxo Bank.
Brent for June delivery dipped 20 cents lower at $31.28 a barrel on the ICE Futures Europe exchange. The contract earlier jumped as much as 8pc. It lost 7.7pc last week and has fallen from $66 at the end of last year.
West Texas Intermediate for May delivery was up 11 cents, almost unchanged at $22.87 a barrel on the New York Mercantile Exchange, after dropping almost 20pc last week.
With oil prices in freefall since February and storage at a premium, Goldman Sachs called the Opec+ agreement "historic yet insufficient".