Oil commentary - 4 June 2020

Morning all. Brent is trading this morning at $39.09 down 0.70 and WTi is down 0.82 trading at $36.47. Like being married to Katie Price, I'll keep this short. I mean what else is there to talk about if you're in the oil market? The OPEC+ meeting of course. The market is not sure what exactly will happen, but we have heard that unless Iraq and Nigeria pull their socks up then OPEC+ will jolly well write to The Daily Telegraph about it. Naughty boys. Imagine that article "Dear sirs, Iraq and Nigeria are not complying, and we will not do it for them! Please tell them. Yours, MB". The thing is that the rally is all about supply being curtailed, not demand coming back. If it were about demand coming back, then $10 oil would be looking expensive. And I will not listen to the argument that demand is coming back as restrictions are being eased because if EIA data is anything to go by then nobody is going anywhere. For those who don't have their noses glued to a screen at 1530GMT on a Wednesday EIA figures showed a marginal draw on crude and huge builds on products. No Bueno. The worrying thing is that US oil production is not really dropping significantly either, last week it was 11.2mn bpd. That's about where we were in October 2018. With flat price returning to levels producers are happy with, I imagine it won’t be too long before we see this figure creep up again. At the end of the day there is still a lot of oil being produced and, as we all know, not a lot of places to put it. Helllooooo contangoooo. Keep your eyes on the headlines. Good day.