Oil prices hardly changed as market waits for more news - Rystad Energy comments

Oil prices are largely unchanged this morning as the soon-to-expire WTI front month futures for May still trading around the $20 mark, after closing below $20 yesterday for the first time since February 2002.

Low prices are here to stay until there is some clarity on when and by how much non-OPEC+ countries will chip in with additional production cuts. If these extra cuts prove to be substantial we will see some price recovery, if not then storages will continue filling up and prices will plummet further.

As for WTI no wonder why it is struggling – yesterday, the DOE reported that US crude inventories last week built by 19.3 million barrels, the largest amount on record (at least since 1982), which even topped our own expectations.

Furthermore, also the IEA in its OMR published yesterday joined the bandwagon of forecasters that oil demand in April will collapse by 29 million bpd and drop 9 million bpd for the entire 2020.

Markets will continue to search for clues on where the bottom will be and economic news from the US continue to show weak numbers off the charts for unemployment and retail sales, showcasing the severity of the ongoing economic shock.

What will be the most important determinant for oil markets in the short term is how quickly governments relax social distancing measures, and we are seeing positive signs from Germany while the jury is still out on the timeline for the US reopening.