To revitalize crude markets, OPEC+ reduced oil production in June to its lowest level since the Gulf War in 1991. The reductions came after record cuts in May by Saudi Arabia and Russia, which slashed output by 29% and 17%, respectively. Production in the U.S., during the same timeframe, fell just 8%. The masterfully coordinated OPEC+ reduction strategy pushed WTI and Brent prices up 50% in just two months, to average $38/bbl and $41/bbl in June.
Tuesday, September 29, 2020
World Oil - As U.S. drilling plummets to 122-year low, losses may intensify in second half
The spread of Covid-19 caused widespread disruption to financial and commodity markets during the first half of 2020. Extended government-sponsored lockdowns resulted in economic hardship and a dramatic decline in demand for jet fuel, gasoline and diesel. When the virus-induced disruption was at its peak in March/April, demand for gasoline fell 45%, with only partial recovery in May/June. Jet fuel also took a major hit, with commercial flights down 80% in April, compared to January levels. The combination of oversupply and loss of demand led to a rapid and intense bust scenario, which was one of the most detrimental in the industry’s history.
To revitalize crude markets, OPEC+ reduced oil production in June to its lowest level since the Gulf War in 1991. The reductions came after record cuts in May by Saudi Arabia and Russia, which slashed output by 29% and 17%, respectively. Production in the U.S., during the same timeframe, fell just 8%. The masterfully coordinated OPEC+ reduction strategy pushed WTI and Brent prices up 50% in just two months, to average $38/bbl and $41/bbl in June.
To revitalize crude markets, OPEC+ reduced oil production in June to its lowest level since the Gulf War in 1991. The reductions came after record cuts in May by Saudi Arabia and Russia, which slashed output by 29% and 17%, respectively. Production in the U.S., during the same timeframe, fell just 8%. The masterfully coordinated OPEC+ reduction strategy pushed WTI and Brent prices up 50% in just two months, to average $38/bbl and $41/bbl in June.
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