Oil commentary - 31 March 2020

Morning all. May Brent expires today but is currently trading at $22.66 down 0.10 and WTi is up 1.06, trading at $21.15. Again, let's start the day with a smile, or a groan, "My wife asked me to go get 6 cans of Sprite from the grocery store. I realized when I got home that I had picked 7 up.". Excellent. OK, on to this oil market. As I said, May Brent expires today and the contango between May and June currently stands at $4.17 per barrel, so right now June Brent is worth $26.83. It's funny actually, the difference may only be just over $4 per bbl but there is a massive difference between Brent trading at $23 and $27, psychologically. I still think prices have some way to come off, sadly. But I am not as disconsolate as I was even only 12 hours ago. I am by no way saying that the world is on top of the Corona virus outbreak, far from it, but I think there is some light. It's only a speck, but a speck will do. Also, I do not think that the oil market can rely on a call between Trump and Putin to save it from its woes. That is tantamount to saying "Jack Grealish behaved very responsibly at the weekend". No, the call today is just to pacify markets, there will not be a resolution to crude's current predicament and if there is, once all this is done, I will dust off the mankini again, OK? The US energy system is a deregulated one, a far cry from most other energy producers so government intervention to help things out? Hmmm, I'm not so sure. What would the government want in return? You can only imagine, free oil or some equity and neither of those things are realistically going to happen. Look the current crisis crude oil is facing itself with is debilitating for the majority of people involved, but when it is compounded with the market being flooded with crude oil it doesn't need, primarily from Saudi Arabia, what other direction is it expected to take? What happens from here though is key. Saudi look like they are not going to back down, indeed yesterday they said they plan to increase exports. Quite where it will all go is anybody's guess. But if Russia and the US agree to some form of production cut, or at least set the ball rolling on one, then where will this leave the de-facto leader of OPEC? To form of any kind of recovery, this question will have to be addressed, and pronto. Good day.