Month in brief

• DOI: http://doi.org/10.1111/oet.12771
• Date: 01 May 2020
• Published date: 01 May 2020

THE MONTH IN BRIEF

Month in brief

April was another traumatic month for oil markets. It began

with a sharp price rally, after Brent sank below $25/bbl at

theendofMarch.Theupwardpressurewaslargelydueto

anticipated output cuts by the OPEC-plus group, possibly in

cooperation with a still wider group of producers, although

the extent of the impact from Covid-19 on demand contin-

ued to grow. Comments from President Trump saw strong

gains on 2 April, and the following day Brent settled up

nearly 14% and WTI climbed 12%, as Russia indicated it

would be involved with the cuts and that a record-breaking

10mn b/d OPEC-plus reduction was on the cards.

The following Monday 6th, prices eased back as the US

made clear it would not be part of any top-down deal to cut

output, and OPEC-plus postponed its emergency meeting

until 9 April. Brent held fairly steady for the next few days,

trading in the low $30s/bbl, with support coming from an

increasingly likely OPEC-plus supply deal and evidence of

declining output in the United States and Canada in

response to the lower prices. News that an upcoming G20

meeting would discuss possible output cuts among its

members, in an effort to help stabilize the market, also hel-

ped balance the growing impact of Covid-19 on demand

around the world—which was becoming increasingly

apparent as refinery run cuts mounted and storage filled

up. In the United States, crude stocks saw their sharpest

ever rise, jumping by 15.18 mn bbl in the week to 9 April.

Wrangling among OPEC-plus over baselines saw the

emergency OPEC-plus meeting pushed back until

12 April, and negotiations continued over the Easter

weekend. On the Saturday, the G20 said it would work

together to stabilize oil prices, but did not make any spe-

cific commitments on production restriction. Then on

Monday 13th, OPEC-plus cuts of 9.7 mn bpd were con-

firmed, with Russia and Saudi both taking 2.5 mn bpd.

There were also commitments from other countries. Ini-

tially prices showed little movement, but with the virus'

impact on demand by now being put at as much as

20 mn bpd for April, many judged the cut to be insuffi-

cient and over the remainder of the week prices slipped a

few dollars (to just over $28/bbl for Brent).

The following Monday 20th saw the biggest ever

slump in prices on a major crude futures contract, with

front month (May) WTI tumbling by 300% to well

below zero for the first time ever on its last day of trad-

ing, as concerns rose over tank-top storage—leaving

producers paying to have the oil taken off their hands.

June WTI, however, was less affected, but fell toward

$10/bbl. Brent, which has better access to markets, saw

less downside, but still fell sharply to around $25/bbl

on the 20th, and below $20/bbbl the day after as the

market priced in evidence of an increasingly large

slump in demand. Then on 23 April, WTI rebounded

with a 25% increase on the back of comments from

President Trump that drew attention to tensions in the

Mideast Gulf. Brent also recovered slightly, but dipped

back below $20/bbl on the 27th, and remained in the

low $20s/bbl until the end of the month.

How to cite this article: Month in brief. Oil and

Energy Trends. 2020;45:7. https://doi.org/10.1111/

oet.12771

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