Crude Had Its Biggest One Day Drop Since 1991
March 10, 2020
Yesterday saw most all markets take massive losses and energy was no exception with crude oil down 20% the biggest one day down since 1991. This was all the reaction to the fear surrounding the coronavirus and Saudi Arabia saying they would increase production after the OPEC+ group couldn’t come to an agreement.
Saudi Arabia is expected to produce 12.3 million bpd which is 300,000 bpd more than their previous maximum. Saudi Aramco said it would increase its crude oil production after the current OPEC+ supply agreement expires at the end of the month.
Russia energy minister, Alexander Novak, said the fall in oil prices would not impact the country’s oil sector and that Russia would remain competitive and keep its share of the market regardless of price forecast. He also said that Russia could add an additional 500,000 bpd to their output and the cooperation with OPEC was not a totally shut door. These comments have helped to ease some of the concerns brought on by Russia’s decision and likely helped support some of the market’s rebound.
The market is trading higher again this morning after yesterday huge selloff. It has been a very volatile day and a half of trading so far and it is likely not done yet. Monday was very likely a day of exasperation for many trading energy as the selloff was massive and many traders were forced to exit positions. The extreme move lower is fueling the rebound the market is seeing now but how this all looks at the end of the week will be a much more critical.
According to Reuters, OPEC producers lost more than $500 million revenue as oil erased over a third of it values overnight following the breakdown of the OPEC+ group.
Italy has seen the coronavirus spread rapidly and as a result almost the entire country has been quarantine, which is an unprecedented move.
President Trump made the announcement of a possible stimulus package of some sort to try and help offset the impact brought on by the coronavirus. A payroll tax cut was one of the measure that was mentioned.