WTI: OPEC+ has not done enough and Trump knows it

• WTI in a chop during holiday thin markets post OPEC.
• More cuts to come from OPEC to satisfy markets for higher prices?

The price of oil has been in a chop on Easter Monday with European still out on holidays and the US thinner than usual and less volume going through, despite the weekend's news of an OPEC+ accord on a production cut. At the time of writing, West Texas Intermediate, (WTI) is trading spot at $22.95, -0.91% between a range of $22.07 and $24.56.

• OPEC+ agrees oil output cuts of 9.7 mln bpd

On Sunday, a month-long price war ended between Russia and the Saudis who had been flooding the world with mass amounts of crude oil which sunk prices to rock bottom considering there was no demand pertaining to the COVID-19 crisis. An accord, brokered by the US, struck by the Organization of the Petroleum Exporting Countries and Russia was agreed for a global output cut by 9.7 million barrels a day. However, the markets are disappointed by that amount and figure more needs to be done considering just how much of a demand shock there is and this move will only go partway toward stabilizing oil prices. More on this here.

Trump knows it

Meanwhile, on Monday, US President Donald Trump spoke up about the production cut and indicated that OPEC+ were not done yet:

Having been involved in the negotiations, to put it mildly, the number that OPEC+ is looking to cut is 20 Million Barrels a day, not the 10 Million that is generally being reported. If anything near this happens, and the World gets back to business from the Covid 19.....

This is a figure that could well appease the markets.

Bank analysts opinions

"Two-way risks remain particularly high, but the balance of risks rests to the downside as the unprecedented demand shock and swelling inventories are unlikely to be offset by even a 10m bpd curtailment," analysts at TD Securities explained, adding that with "front month contangos over $5/bbl for WTI, and not much better for Brent, the prospect of rolling long positions becomes extremely expensive and is likely to provide another bearish lean as investment demand and bottom picking flows could very well decrease. With that said, CTAs remain well-positioned for further downside."

Meanwhile, analysts at Rabobank explained that, "yes, the virus has wreaked havoc on fuel consumption but with that, there is also a great deal of pent up demand that is ready to be unleashed in the months ahead and perhaps even a bi- partisan US infrastructure package in the making. Not to mention the idea of a global coordinated supply cut that is also in the works as I write this! For these reasons, we would also advocate a relatively small allocation of say 10% of total capital to a deferred “long” oil position to be paired with the ”short” calendar spread position so as to participate in any flat price rally that may ensue from these historically cheap levels."

WTI levels

• Oil New York Price Forecast: WTI under pressure, trading sub-$24 per barrel