Oil prices have continued to surge as the market weighs a significant shift in supply fundamentals as producers discuss a global output reduction of 10 million barrels a day. A video conference is expected on Monday that will be open to all producers, notwithstanding OPEC and its allies. Despite this attempt in stabilization, the demand destruction from the fallout of the coronavirus casts a shadow on the oil sector. Russian producers have said to be on board, however, without concerted output reduction from the U.S. as well, efforts may not be enough as initial estimates are a reduction in daily demand of 35 million barrels. Global demand storage remains elevated with U.S. pipeline operators asking drillers to curtail production as stores get close to capacity. Ultimately, despite cuts as a near term catalyst oil may need eventual production shutdowns to establish a longer-term floor. Oil volatility (OVX) remains highly elevated at 160 with the market remaining bearish trend with today’s range seen between 18.68 – 27.34.

Crude Oil May ’20 Daily Chart
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Alex 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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