Oil has continued to press higher after surging over 11% yesterday as prices weigh the potential of market driven cuts amid the fallout from the massive demand destruction from the coronavirus. This comes amidst a record build in weekly stockpiles of 15.2 barrels (EIA) as refiners pulled back operations to the lowest since 2011, which was in part offset by the highest production decline since September. Oil has garnered support under the pretense of impending production cuts that would reduce global output by about 10 million barrels a day. However, the agreement has yet to be solidified as Russia remains doubtful of American contributions. In addition, reports are that Moscow and Riyadh are in continued disagreement regarding baseline and volume for the cuts. The world’s largest oil producers will meet Thursday and Friday in an effort to curtail the flood of crude which, seemingly, may not be enough to offset this demand loss. Moreover, energy ministers from the G-20 are set to meet in a video conference on Friday in order to ‘ensure stable energy markets and enable a stronger global economy.’ Again, oil levels may continue to remain imbalanced provided deeper than expected cuts as storage levels would continue to be saturated and eventual production shutdowns needed as distressed producers continue to move physical and spot prices lower. The market remains bearish trend with today’s range seen between 17.62 – 29.92.

Crude Oil May ’20 Daily Chart
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Alexander Turro

Senior Market Strategist
Alex began his career with an IB at the Chicago Board of Trade after graduating with a BA/BS from Indiana University. He then went on to work for a proprietary trading software company before joining RJO Futures as a Market Strategist.
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