Oil Market
April 11, 2020

Non-OPEC Oil Producers

While parts of Europe are tentatively dipping their toes into a lighter form of a lockdown, with Austria planing to reopen businesses from next week and Denmark restarting schools, the pandemic is claiming a much higher toll in the US.

Crude oil inventory

Given that the US is a little bit behind Europe on the virus spread curve, next week’s US oil and economic data will carry more weight than usual as it will very quickly provide an insight in how badly the ravaging of the coronavirus is affecting the domestic oil market.

OPEC plus

Saudi Arabia and Russia have temporarily buried their hatchets, under duress, and together with other OPEC members agreed to cut production by 10m/bbl a day.

Though the decision has been a long time coming, the size of the cut will only make a dent in the declining oil price given that global demand has dropped by more than 30% since the start of the pandemic.


Some smaller European countries are talking about a slight easing of lockdown rules but to put it into perspective, they have already said that they will keep their borders closed and not allow international travel and holidays until there is a vaccine.

This means that the two main strands of oil demand, demand from cars/buses and jet fuel demand for the airlines, are unlikely to seriously tick up before the autumn.

Now that OPEC and Russia have made their move, the rest of the support for the oil industry will have to come from elsewhere.


At today’s G20 meeting, it is possible that the other countries will be asked to either commit to lower production or to buy more oil for their strategic reserves to take some of the surplus out of the market.

The ball will be mainly in the courts of the largest producers, including Canada, Mexico, Brazil and the US.

EIA status report, rig count and jobless data

Possibly the scariest US data at present, apart from the number of infected people, is the galloping increase in initial jobless numbers. On current count the last three weeks have brought 3.3m new jobless, then 6.8m and this week another 6.6m new job seekers.

Until the tide of job losses begins to turn there is no chance of the oil market changing trend either, other than on a very temporary basis, as the fundamental underlying domestic demand continues to be far less than pre-crisis levels.

The Energy Information Administration’s report on Wednesday is likely to show a further decline in oil production and deeper destruction of domestic US demand.


Refinery utilisation rates have already dropped to 75.6%, down from 82.9% earlier this month and US crude oil refinery inputs thinned out by 1.3m bbl per day to average 13.6m bbl per day.

The number of rigs operating in the US has declined by almost 10% to 664, a loss of 361 rigs compared to the rig count a year ago. In the week ahead, look out for further news from producers, be it about abandoning future projects, shuttering parts of production or cutting jobs.

The gasoline prices.
The gasoline prices.
WhenWhatWhy is it important
Mon April 13Easter MondayEuropean and Australian markets closed
Mon April 13Russia budget fulfilmentIf Russia’s budget shows a deficit it will be a red flag for the oil market requiring keeping a closer eye on Russia’s oil production decisions
Tue April 14China March trade dataIt will show how much the country’s trade remained stymied in March because of corona
Tue April 14 20.30CFTC commitment of traders oil positionsDelayed data postponed because of Easter holidays
Tue April 14 21.30API US weekly crude oil stocksLast at 11.938m
Wed April 15 13.15US March industrial productionFirst glimpse of the impact of virus lockdowns on US industrial production
Wed April 15 15.00EIA US crude oil stocksGiven the exceptionally fast rise in unemployment and shop closures expect an increase in unused stocks
Thu April 16OPEC monthly oil market reportCovers global demand and OPEC production in March
Thu April 16 13.30US initial jobless claimsDreaded US jobless data showing full scale of the employment market destruction
Fri April 17 03.00China March industrial productionExpected to show improvement on Feb data as the production restarted post corona
Fri April 17 03.00China Q1 GDPA glimpse of what kind of demand there will be from China once the world re-emerges from the pandemic
Fri April 17 18.00Baker Hughes US oil rigLast week the count dropped by 64 to 664, down 361 y-o-y. Expect further declines
Fri April 17 20.30CFTC commitment of traders oil positionsMoney managers’ oil positions