If the oil industry wasn’t taking the level of demand destruction seriously, it certainly will now after crude oil futures went negative, in the opinion of strategists at ANZ Bank.
Key quotes
“The OPEC+ supply agreement should stem the flow of oil into storage tanks in the medium term. In the US, the number of drilling rigs is falling, which should see US shale output start to fall in coming months.”
“WTI futures rebounded in early Asian trading; but we suspect the WTI June future will come under pressure unless there is more immediacy around supply closures. This may come as forced closures or even bankruptcies in the US shale industry.”
“We would expect OPEC+ members to talk about bringing forward their planned production cuts from the recent supply agreement. The 9.7mb/d reduction is scheduled for 1 May. Even so, we see it having minimal impact on crude oil prices in coming weeks.”
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