It’s fair to say that the oil market is experiencing one of its most challenging periods, with a ripple effect expected in the tanker market as well. In its latest weekly report, shipbroker Gibson said that
“a week after the biggest deal in oil history was agreed, the oil price has eased off and the contango spread in crude futures is wider than before the deal was signed. The markets seem underwhelmed. However, this should not detract from the scale of the agreement. No matter what the baseline, removing 9.7 million b/d for May and June, followed up a deep 7.7 million b/d cut for the balance of the year and restrictions of 5.8 million b/d until April 2022, is unprecedented. To add to this, further cuts, be it State imposed or through economic declines from the US, Canada, Brazil and potentially Norway, could further reduce supply by 3-4 million b/d. Further action by key oil consumers to increase crude purchases for their strategic petroleum reserves (SPRs) will also have an effect. Nevertheless, given the current demand destruction, the fact remains that these worldwide cuts are simply not enough”.
Source: Gibson
“a week after the biggest deal in oil history was agreed, the oil price has eased off and the contango spread in crude futures is wider than before the deal was signed. The markets seem underwhelmed. However, this should not detract from the scale of the agreement. No matter what the baseline, removing 9.7 million b/d for May and June, followed up a deep 7.7 million b/d cut for the balance of the year and restrictions of 5.8 million b/d until April 2022, is unprecedented. To add to this, further cuts, be it State imposed or through economic declines from the US, Canada, Brazil and potentially Norway, could further reduce supply by 3-4 million b/d. Further action by key oil consumers to increase crude purchases for their strategic petroleum reserves (SPRs) will also have an effect. Nevertheless, given the current demand destruction, the fact remains that these worldwide cuts are simply not enough”.
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