US Oil Offering a Discount for Stock Reserves: Will They Turn Prices Around?

President Donald Trump ordered U.S. energy officials to purchase “large amounts” of oil to fill up the nation’s emergency reserve after the biggest price crash in a generation. Will they turn the prices around?
16 March 2020 | HYCM – As Adam said on Friday, the reason OPEC negotiations fell apart two weeks ago was because of the coronavirus. It was the fall in demand from the coronavirus that led to OPEC needing to cut production by 1.5 million bpd. US oil is currently at 30.42 and Saudi Arabia must be hoping that these discount prices will cause countries to step in and top up their own oil reserves.
Support for the US Oil market from low prices
The US topped up its strategic reserves on Friday temporarily boosting oil. However, oil was soon sold off as soon as the market refocused on all the weekend headlines as COVID-19 spreads unabated. Central banks have tried cutting interest rates, Gov’t’s have tried fiscal stimulus. Nevertheless, this is a medical problem that needs a medical solution. The falling demand will keep oil pressured on any retracements.

2 things to look out for in US oil price

So, a couple of things to watch for oil. Firstly, if China decides to stock up its reserves then expect a similar spike in oil as when the US topped up their reserves. If you have a news squawk then keep it on. Secondly, expect any spike to be sold into as the main issue remains – demand falling as the entire globe stops moving fluidly on these coronavirus fears.
I still like the potential of some oil bargains and still have pending orders down at $11.50 now. Check out my article from last week, still relevant today.


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