Crude Oil Weekly Market Report

PAST WEEK PERFORMANCE:

The price of oil turned negative briefly this week, which meant investors were willing to pay to get rid of their oil contracts.

Crude oil inventories are still heading higher and oil stocks are totally full.

Social distancing measures imposed on consumers and business shutdowns enforced to combat the spread of the coronavirus pandemic have led to a collapse in international trade and travel. Gasoline and jet fuel prices have sunk as a result leading to crude oil inventories rapidly filling the available storage space.

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That pushes oil investors toward tankers to stock oil.

Plummeting demand during the coronavirus pandemic has left traders scrambling for ships and other alternative facilities

According to npr.org “With about 20 million barrels of crude oil on board, dozens of tankers are anchored along the California coast — turning into floating storage for oil that is in short demand because of the coronavirus.”

As a result, the tankers market benefited from the situation and made great profits.

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Oil rig count is still decreasing sharply following the decrease in oil prices.

THE NEXT WEEK OUTLOOK

Even that OPEC+ countries will start cutting oil output by the first of May, the gap between supply and demand is still wide, as nearly 50% of the world economic activity has stopped working amid the coronavirus threat.  

Oil demand is shrinking while stocks are full and oil producers still pumping oil.

Many countries around the world start making plans to reopen the economy again, starting by some necessary businesses and industries, and insisting on safety measures in order not to face a second wave of COVID-19.  But most of those plans won’t take place till the second half of May and wouldn’t any soon diminish the gap between supply and demand. Especially that those countries are not ready to open their frontiers to international trade and travel.

All that makes the crude oil futures current contract for June delivery which ends by 19 May 2020 may face probably a similar scenario of the previous contract or at least trades near zero.