Monday, February 3, 2020

Oil prices 2/3

Oil prices are off their lowest level in more than a year after Saudi Arabia ponders what it needs to do to stabilize prices.  OPEC + will have a two-day technical meeting starting tomorrow and expectations are high we could see a total reduction of 500,000 to 1-million barrels per day of additional cuts.  The start of the trading week saw West Texas Intermediate crude fall to the $50.42 level after reports that Chinese oil demand plunged by ~3 million barrels a day, which is about 20% of their total consumption. 

Oil prices will likely remain near the low $50s until we see further signs that China will see some return to normalcy with oil consumption.  Any extended cuts delivered by OPEC + will likely deliver rallies that will get sold into.  Oil prices will remain heavy until we see start to see some signs that the virus may be peaking. 

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