Oil futures on Friday booked the biggest daily slide since 2014 as a deal between the Organization of the Petroleum Exporting Countries and its allies, led by Russia, collapsed in Vienna.

“The OPEC+ alliance has finally run its course (at least for now) with Russian energy minister [Alexander] Novak saying producers are free to produce at will from April 1,” Marshall Steeves, energy markets analyst at IHS Markit, told MarketWatch. The current OPEC+ agreement expires at the end of March.

Following the talks on Friday, OPEC+ sources they would continue consultations to stabilize the oil market, but made no comment on production cuts, The Financial Times reported.

“Evidently, the Russian approach is to allow prices to decline to the point that shale producers are squeezed out,” said Steeves. “Already, there have been more bankruptcies in the shale patch and integrated majors such as Exxon have announced reduced interest.”

West Texas Intermediate crude for April delivery

dropped $4.62, or 10.1%, to settle at $41.28 a barrel on the New York Mercantile Exchange, with prices booking the sharpest daily decline since Nov. 28, 2014 based on the most-active contract. The contract hit its lowest settlement since August of 2016, according to Dow Jones Market Data.

May Brent crude
the global crude benchmark, finished down $4.72, or 9.4%, to end at $45.7 a barrel on ICE Futures Europe, marking its lowest settlement since June 22, 2017.

For the week WTI crude traded 7.8% lower, while Brent crude has lost 8.9%, according to FactSet data.

‘At this point in time, it is difficult to pinpoint where the floor is on oil.’

— Lukman Otunuga, FXTM

The failure to reach an agreement “could not have come at a worst possible time for oil that [is] trapped in a losing battle with demand-side concerns,” said Lukman Otunuga, senior research analyst at FXTM.

“At this point in time, it is difficult to pinpoint where the floor is on oil,” he told MarketWatch.

“To cut a long story short, the horrible combination of stuttering demand and rising shale production will most likely spell more trouble for oil, which has weakened almost 30% since the start of 2020,” said Otunuga.

The Energy Information Administration reported that U.S. oil production reached a fresh record at 13.1 million barrels a day for the week ended Feb. 28.

Still, James Williams, energy economist at WTRG Economics, believes that by “the time the world is recovering from the economic impact of the coronavirus…U.S. production will be in decline. That will be good for OPEC in the fall,” he told MarketWatch, adding that the “low oil prices will help the rate of economic recovery.

The news of Russia’s refusal to go along with OPEC’s plan did not come as a surprise. Earlier news reports said Russia, which is not a member of OPEC, had been resisting a call by the cartel for extra production cuts through the end of this year.

The impasse comes after OPEC ministers on Thursday agreed on a call that would see the cartel cut production by a further 1 million barrels a day, while OPEC allies, led by Russia, would reduce output by an additional 500,000 barrels.

Read:Why OPEC’s proposed oil-production cut may not be enough to steady the market

Oil prices also suffered as investors around the world continued to dump stocks, commodities and other assets perceived as risky in favor of traditional havens on worries over the continued spread of the coronavirus.

Read:Oil shipments to China rebound in February as congestion at the coast clears: reports

Also read Barron’s:Jet-fuel prices plummet as coronavirus feeds travel fears

Oil prices had briefly pared losses early Friday after a stronger-than-expected February jobs report, which saw the U.S. economy add 273,000 new jobs in February. The rise topped the consensus forecast for a rise in payrolls of 165,000.

In other energy trading, April gasoline

fell 13.28 cents, or 8.7%, to end at $1.3890 a gallon, and notched a weekly slide of 6.3%, while April heating oil

dropped 10.33 cents, or 6.9%, to finish at $1.3852 a gallon, booking a weekly decline of 6.2%.

April natural gas

shed 6.4 cents, or 3.6%, to $1.708 per million British thermal units, notching a weekly advance of 1.4%.

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