Oil may have gained 20% on Trump’s tweets Thursday, but heed this: Even if OPEC+ agrees to a purported 10-million-bpd cut and even considering that China has ordered all of its oil companies to buy up oil on the cheap to fill strategic reserves, it’s not going to get demand anywhere close to where the market needs it.
It will, however, alleviate the immediate critical issue of running out of oil storage space.
There is a lot of talk about Trump “pressuring” Saudi Arabia and Russia on this, but the only real pressure on both is their own economics and the global COVID-19 disaster, which makes this oil price war and market share game untenable at best.
Also beware that Iraq is planning to increase production by 200,000 bpd this month, despite all.
The backdrop to Thursday’s oil bump was a series of tweets from Trump following a phone call with MBS in which the Crown Prince allegedly said Saudi Arabia and Russia would cut by 10 million barrels. He also said he expected a deal between Saudi Arabia and Russia “within a few days”. President Trump later confirmed at the daily press briefing on the coronavirus that the 10-million-barrel figure was actually mentioned in the call.
OPEC sources later confirmed that an OPEC+ meeting had been called for Monday, and that 10 million bpd was the figure that is being considered. OPEC sources also said that the US regulator would be invited to the…