The context is improving, with supply declining and demand rising as countries take containment measures. OPEC+ measures to slash production (reduction of the supply balance by 9.7 million barrels per day; effective May 1), combined with the decline in US production, is lowering the pressure on crude oil stocks, as evidenced by the evolution of US stocks, which recorded a surprise drop in mid-May, the first since January. This optimism is also linked to new forecasts by the International Energy Agency (IEA), which were less catastrophic in its latest monthly report. The agency will revise its forecasts for oil demand this year, which is expected to fall by 8.6 mbpd in 2020. Technically, there is a strong increase in the number of large scale oil tanker markets, which are becoming increasingly commonplace. Volatility is however quite exceptional, the barrel of Brent has risen by more than 80% since the end of April, although it has dropped by 50% since the beginning of the year. In weekly data, prices are evolving within a wide price range between USD 20 and USD 35. While the rebound in prices since the end of April has been strong, it is important to keep in mind that the underlying trend is still down. As such, and given the amplitude of the rebound, we can legitimately question the sustainability of this rebound. Crude oil prices are indeed coming back to test major resistances;near the USD 36-37 zone, caution is key regarding the continuation of the upward movement.
|Delayed - 09/22 10:35:36 pm|
Oil: From Pessimism to Optimism05/21/2020 | 05:01am
Oil prices have been recovering for several weeks after the historic fall in WTI prices to below the zero dollar mark, and have since recovered significantly, supported by improved prospects.
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