OPEC+ and G20 oil producers have agreed a production cut after four days of talks.
ICYMI, the oil news to open the new week (read from the bottom up for the chronology):
- Goldman Sachs are unimpressed by the oil output cut deal - "insufficient"
- OPEC+ draft statement says expected total oil output cuts of more than 20m bpd
- Here are the main points so far of the OPEC+ agreement to cut oil output (and the 3 things they missed)
- OPEC+ oil output cut deal agreed Sunday
You'll note in the "3 things they missed" post the cuts did not address the demand destruction from the COVID-19 outbreak and response nor the (global) recession that is unfolding in its wake. Producers can cut supply, and in doing so they hope to spur demand, but apart from that the demand side is out of their hands.
Comments from BNP analysts:
- After an initial positive reaction in oil prices, we expect the OPEC+ decision at best to establish a floor under the market
- Also capping oil price gains will be hedges from producers
- We do not expect a sustained recovery in the oil price until pent-up demand is released in Q3
