Crude Market Sees Extremes
March 20, 2020
These are very interesting times as Wednesday some energy market put in 18 year lows and crude oil has been down over 50% this month and then Thursday a huge rally back to the upside to establish the best day every for energy. In two days, that show the extremes of this current situation and these markets that are driven wildly by instant news.
Reports that the US government will be buying crude oil to put into the Strategic Petroleum Reserve and other reports that the US may stop all crude oil import were the news reports that help energy markets see a huge bonce in yesterday’s trading as one of the best days for energy every. Prices are again higher in early trading as the markets come to the end of a very volatile week.
California has ordered all 40 million residents to go into home isolation. Businesses that have been deemed as non-essential will be shut down. One of the reasons for this move is the World Health Organization’s reports that the virus is infecting more people at a faster pace as the world death toll is now over 10,000. The question that we now must ask is if California is shutting down how long before Washington and New York do the same?
In Texas, the Railroad Commission is considering limiting crude oil production in the US largest producing state. Others are out there asking other produces to come together and limit production. These are unprecedented developments as the US may be on its way to become the world swing producer. These are extreme times and extreme measure are taking place on many fronts, but this will be something very interesting to watch and to see what the longer term ramifications might be. I will just say that so far all this is just asking producers and not sure what the response will be. Also, President Trump said he would intervene in the oil price war at the appropriate time.
Yesterday initial jobless claims showed a 70,000 increase. Many believe this number will jump substantially next week. Goldman Sachs is warning that this number could surge to a record 2.25 million for this week, which will show up in next weeks’ numbers.