As OPEC+ is planning to meet in the next two weeks, investor’s are becoming increasingly concerned with whether or not Russia will continue its oil productions cuts as the coronavirus pandemic continues to ravage the world.
As a result of unsettling investor behavior, West Texas Intermediate fell below $33, while crude inventories in the US continued to increase, despite previous projections of decreasing inventories – especially after the long weekend. Although the Memorial Day weekend has always been regarded as the kickoff for summer’s driving season, this year was very much different. Gasoline demand dropped by 25% over the long weekend, compared to the same time only a year prior.
OPEC+ made a commitment to reduce oil output as a means of stabilizing prices, which have since increased by nearly 75% since. However, the relatively high oil prices may entice producers to increase their output, even if the demand for oil is stagnant.
Information for this briefing was found via Bloomberg and Zero Hedge. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.