WTI Crude Prices Hit an 18-Year-Low
April 17th, 2020
WTI crude oil closed at an 18 year low yesterday slightly below the $20 major support level. This was the result of a bearish OPEC monthly report put out yesterday, a bearish International Energy Agency monthly report released Wednesday, and a very bearish EIA weekly petroleum inventory report released Wednesday. The products are trying to move in the other direction and show strength, but will there be enough buyers to continue to the momentum?
OPEC’s monthly report forecast that world petroleum demand will contract by 6.9 million bpd for calendar year 2020, which is a drop of 6.9% from calendar year 2019.
The International Energy Agency (IEA) forecast a record drop of 9.3 million barrels per day in world oil demand for calendar year 2020.
US retail sales fell 4.4% in March compared with the same month a year earlier, the fastest year-on-year decline since October 2009, near the trough of the last recession. The downturn will be worse in April because it is the first full month in the lockdown.
Another 5.23 million Americans filed for unemployment this week, bringing the monthly total of jobless to 22 million due to the coronavirus. The coronavirus shutdown has now nearly wiped out all the jobs gained since the Great Recession. “As we fully know the current state of the labor market with mass waves of layoff, the key question turns to how many of these people will be rehired when the economy starts to reopen,” said Peter Boockvar, chief investment officer at Bleakley Group.
Bloomberg News reported, “Saudi Arabia and Russia signaled they may be open to further output cuts after the latest OPEC+ deal to curb global oil supplies failed to stem crude’s downward spiral. The two nations will “continue to closely monitor the oil market and are prepared to take further measures jointly with OPEC+ and other producers if these are deemed necessary,” Russian Energy Minister Alexander Novak and his Saudi counterpart Prince Abdulaziz bin Salman said in a joint statement published after a phone call.”