Oil: Supply is more concering than demand – ANZ

FXStreet Team FXStreet

With the collapse of the OPEC+ production cut agreement, the oil market is facing a shock to both demand and supply. Floating storage levels are already increasing, while tanker rates are rising, strategists at ANZ Research apprise.

Key quotes

“Saudi Arabia has more than 2mb/d of spare capacity. We expect its output to push above 12mb/d in Q2.”

“We expect US oil production to fall, as the industry battens down the hatches to weather the expected price war.”

“We estimate pandemic-related demand losses of 1.6mb/d in H1 2020. That said, lower prices and resuming business activities will see a strong rebound in demand in 2H 2020.”

“The supply increase from OPEC+ nations is more concerning. Should the price war worsen, we see a risk to the oil price.”

Author

FXStreet Team

FXStreet

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