Archives of “April 2020” month

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Goldman Sachs are unimpressed by the oil output cut deal – “insufficient”

  
  Analysis
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GS say the OPEC+ G20 production cut is too little too late, and the bank sees downside risk to its $20/barrel price forecast

  • “Today’s agreement leaves the voluntary cuts as still too little and too late to avoid breaching storage capacity, ensuring that low oil prices force all producers to contribute to the market rebalancing”
  • no voluntary cuts could be large enough to offset the 19m b/d average April-May demand loss due to the coronavirus
  • OPEC+ voluntary cut is an only actual 4.3m b/d reduction in production from 1Q 2020 levels
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Oil traded higher initially upon market reopen for the week, gave it all back and turned negative and is now not much changed from late last week levels.

Here are the main points so far of the OPEC+ agreement to cut oil output (and the 3 things they missed)

  
Analysis, Crude
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OPEC+ and the G20 have agreed to cut oil production by just under 10 million barrels / day.

Oil trading begins for the week at 2200GMT with Sunday evening trade on CME,
ICYMI … :
  • a cut of circa 9.7 million barrels a day of oil across OPEC+ and the G20
  • 13-nation OPEC and others (Russia, US are two) agreed to share cuts

Its unclear how the cuts are to be apportioned, and how the US intends to enforce its promised cuts, but indications are (its is very unclear, but these from sources, awaiting confirmation):

  • Mexico cut 100,000 barrels a day
  • US by 300,000 barrels / day
  • Saudi Arabia’s production to be reduced to 8.5m bpd (from the current whopping 12 million bpd)

When oil trade reopens for the week we’ll see how successful the agreement is, so far, at limiting further price falls for oil.

The important factors that the supply cut does not, is not able, to address is of course is the demand side of the equation. Demand is lower due to:
  • social distancing lock downs of economies
  • the further, recessionary economic impact of these measures (the impacts will linger)
Back to the supply side to finish up, there is a huge overhang of oil in storage.
OPEC+ G20 cut oil production

Coronavirus – UK Prime Minister Boris Johnson is out of hospital!

  
Analysis, Politics

Great news over the weekend with UK PM Johnson discharged from hospital

He had spent a week in hospital, in intensive care for three days with COVID-19.
Johnson posted a video message on Twitter (he is at @BorisJohnson)
A short version is here at the BBC, or in full here at Guardian.
He looks a little haggard, fair enough, but sounds ready to get back into the job.
Johnson’s ill-health was a small niggle for GBP, despite a political system in the UK that would absorb and carry on in the face of such a disruption. That’s been removed now.
Welcome back BoJo!
Great news over the weekend with UK PM Johnson discharged from hospital
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