FXStreet reports that strategists at TD Securities apprise that the energy market continues to be whipsawed by potential production cut expectations.
“The OPEC+ meeting is still set to go ahead tomorrow, with the cartel's analysis indicating demand is set to contract 11.9m bpd in Q2. As such, some delegates have stated a 10m bpd cut is on the table, but they also state no cuts is also a possibility, keeping the range of outcomes very wide.”
“G20 energy ministers are set to meet on Friday to discuss market stability, and the Texas RRC will meet on April 14th. While all of this does offer some optimism that a cut can be done, it remains unlikely that OPEC+ will cut double digits on their own and without commitments from other key producers such as the US.”
“With front-month contangos over $5/bbl for WTI, and not much better for Brent, the prospect of rolling long positions becomes extremely expensive and is likely to provide another bearish lean as investment demand and bottom picking flows could very well decrease.”
The U.S. Energy Information Administration (EIA) revealed on Wednesday that crude inventories jumped by 15.177 million barrels in the week ended April 3. Economists had forecast a surge of 9.271million barrels.
At the same time, gasoline stocks climbed by 10.497 million barrels, while analysts had expected a gain of 4.333 million barrels. Distillate stocks rose by 0.476 million barrels, while analysts had forecast an increase of 1.0446 million barrels.
Meanwhile, oil production in the U.S. reduced by 600,000 barrels a day to 12.400 million barrels a day.
U.S. crude oil imports averaged 5.9 million barrels per day last week, down by 173,000 thousand barrels per day from the previous week.
FXStreet reports that crude oil prices fell on doubts about the ability of oil producers to reach agreement on production cuts, per ANZ Bank.
"Saudi Arabia and Russia continue to hammer out a deal. Reports suggest they are focused on a three-month cut to output, although volumes have not been discussed. What is clear is that the US must be involved."
"President Trump said he hasn't been approached by OPEC yet. But following his meeting with oil executives over the weekend, the likelihood of them agreeing to a voluntary cut to output looks unlikely."
"The market is coming to view that even with a sizeable cut to global supply, the market will remain in a significant surplus following the collapse in demand."
| Raw materials | Closed | Change, % |
|---|---|---|
| Brent | 30.85 | -3.92 |
| WTI | 23.14 | -8.68 |
| Silver | 14.97 | 0 |
| Gold | 1647.95 | -0.66 |
| Palladium | 2164.22 | 0.75 |
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