There is a little more clarity in oil market pricing, but still huge uncertainty on where things are going. It was just a few weeks ago when news of the coronavirus started to hit and OPEC put forward a proposal to cut production by around 1.5 million b/d, but only if there was the support of the OPEC+ group (principally Russia). The agreement didn’t happen, Saudi opened the taps and oil prices collapsed. With hindsight the proposed 1.5 million b/d cut was ‘a drop in the ocean’, with analysts now indicating that global oil demand could be an unprecedented 20 million b/d lower in April 2020 than in April 2019, and also some 4-6 million b/d down for this year as a whole. So, near-term oil supply is up by around 2-3 million b/d and demand down by around 15-20 million b/d. Markets tend to tell you almost everything and we have seen a near 70% collapse in crude prices since the start of the year to hit 18-year lows. At the same time the crude market has switched from backwardation to steep contango, bringing storage into play.

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