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Oil prices slumped on Thursday, giving back an earlier 10 per cent surge as investors doubted the emerging supply-cut agreement between members of OPEC and its allies would adequately address the global fuel demand collapse caused by the coronavirus pandemic.

Oil producers led by Saudi Arabia and Russia were hammering out an agreement to address growing oversupply amid a 30 per cent drop in worldwide fuel demand. The pandemic has crushed global demand, and even a cut of 10 million barrels per day or more would leave millions of barrels stranded, pressuring prices further.

“The collapse in oil prices is a result of the reality that while OPEC is cutting as expected, there is simply too much crude in the physical space for sale, with too few pipelines to move it and too few buyers to take it,” said Scott Shelton, energy specialist at United ICAP.

The Organization of Petroleum Exporting Countries and its allies including Russia, a group known as OPEC+, had considered curbs as great as 15 million to 20 million barrels per day (bpd), or 15 per cent to 20 per cent of global supplies.

However, Iran’s oil minister said a production cut of 10 million bpd is just for May and June 2020. From July until the end of 2020 those cuts would fall to 8 million bpd, and then next year to 6 million bpd.

“A lot of hope got priced into this market over the past several days,” said John Kilduff, partner at hedge fund Again Capital LLC.

Brent futures fell $1.36, or 4.1 per cent, to settle at $31.48 a barrel, while U.S. West Texas Intermediate (WTI) crude dropped $2.33, or 9.3 per cent, to settle at $22.76. That was the lowest settlement price for both contracts in a week.

A cut of 10 million bpd would be the biggest output cut ever agreed by OPEC, but Russia has insisted it will only reduce output if the United States joins the deal.

“A 10 million bpd deal is far lower than what the market needs at the moment,” said Bjornar Tonhaugen, head of oil markets at Rystad Energy noting “now hopes can only rely on what other countries outside the alliance will do.”

Canada and Brazil are cutting output now due to market forces, but Jason Kenney, premier of Alberta, Canada’s largest producing province, said it has already done its part.

The United States has not said it will mandate output reductions. Instead, it has noted that market forces are already causing producers to pull back, as it expects its output to fall by nearly 2 million bpd by next year.

U.S. oil rigs in operation fell by 58 this week to 504, the lowest level since December 2016.

Energy ministers from the Group of 20 (G20) major economies are set to meet on Friday.

The last OPEC meeting in early March ended acrimoniously, with Russia and Saudi Arabia unable to come to an agreement to curb output as the virus spread, adding to the slump in prices.

Meanwhile, the U.S. contract expiring in June rose to its highest premium over the front-month since 2009, a signal that traders are worried that the U.S. would run out of most onshore storage in a matter of weeks, traders said.