Posted: 22 April 2020
What’s next for oil after ‘crazy day’ saw prices go into reverse?
As American oil prices collapsed and plunged below zero on Monday, executives knew that they were witnessing history in the making. “Incredible,” tweeted Pierre Andurand, the hedge fund trader, as the West Texas Intermediate price headed below $3 a barrel.
Mr Andurand, who that morning had warned that “negative prices are possible”, was about to see his prediction come true. An hour later the US benchmark price closed at a previously unimaginable -$37.63 a barrel as sellers were forced to pay people to take their oil, the first time in history that the price had gone negative…
Assynt’s managing director Charles Hollis said it was unlikely Saudi Arabia would take steps on its own to curb production. “The might prefer to ride out very low prices for a few months in the hope that the relaxation of lockdowns will lead to recovery in demand – but that could be quite a few months,” he said.
The second step for IEA is for financial authorities to take steps to “discourage disorderly market outcome”.
The third step is for those countries with strategic reserves to make capacity available to soak up surplus barrels.
US President Donald Trump has said his country is aiming to fill up its reserves with, the addition of up to 75 million barrels which would “top it out”. There seemed to be some ambiguity in Trump’s remarks about whether the government would buy it or merely store it for companies.
The president also said the US is considering stopping oil imports from Saudi.
According to IEA’s most recent market report, demand in April is expected to be down, 29mm bpd from 2019 volumes. This would imply a stock build this month of around…