Oil prices are gushing.
In fact, oil is now up to $24.05 on hopes for the Russia-Saudi price war may be nearing an end.
“With all the speculation and skepticism about the ability of OPEC+ and the U.S. to agree on production cuts ahead of this week’s OPEC and G-20 oil ministers’ meetings, there is a feeling we might see some cuts purely out of necessity as storage capacity fills up,” said Michael Hewson, chief market analyst at CMC Markets UK, as quoted by MarketWatch.
We’ll know more about potential cuts by Thursday, when major oil producers hold a virtual meeting. Reports are already surfacing that Russia and the Saudis are nearing a deal to cut production by up to 10 million barrels, and put an end to a damaging price war.
“Look for at least 10 million and a commitment from non-OPEC of 3 million more,” Phil Flynn, senior market analyst at the Price Futures Group, told Fox Business. “If prices get worse, it could cause long-term harm to the global economy.”
If no deal is reached, oil could easily fall back under $20 a barrel.
All thanks to an increase in supply, and falling global demand. Weekly inventory data from the American Petroleum Institute showed crude stockpiles were up by 11.94 million barrels for the week ended April 3, 2020. That was more than the expected 9.3 million barrels. A week earlier, inventories were up by 10.49 million barrels.
At the same time, the Energy Information Administration (EIA) said global demand could fall by 5.2 million barrels a day, as inventories increase by 3.9 million barrels.
If we see a resolution by tomorrow, some of the top oil names to watch include:
· Exxon Mobil (XOM)
· Chevron (CVX)
· BP PLC (BP)
· Baker Hughes (BKR)
· National Oilwell Varco (NOV)
Stay tuned for further updates on this developing story.