Oil Market Is Desperate for Saudi Arabia to Flatten the Curve - Bloomberg:
It is entirely fitting that the one of best performing energy stock on Friday morning was recently bankrupt Whiting Petroleum Corp. As President Donald Trump’s initial tweet-heard-round-the-(oil)-world has snowballed into a seething mass of optimistic rumor, so the more — how to put this? — speculative stocks have floated to the top. Just as crude oil recorded a 25% gain Thursday by moving all of $5 a barrel, Whiting was near the top of the leaderboard on the back of a 4-cent rally.
Saudi Arabia’s call for an emergency Zoom session on Monday, along with reports that Russia may be coming around to the idea of supply cuts, lend credence to the idea that, even if Trump wildly jumped the gun, cuts are coming. Cue mass celebration in the oil market.
To which, one can only say this: Supply. Cuts. Were. Coming. Anyway. As I wrote here, the collapse in demand means we will quickly run out of places to stash surplus oil. Which means refiners stop buying (almost regardless of price) and production gets shut in (some is already). Saudi Arabia and Russia would love to get the U.S. to sign up as a willing partner in making this look like market management rather than managed retreat — and Trump may be of a similar mind.
Getting cuts of anywhere near the 10 million barrels (a day, we think) cut that Trump touted looks very unlikely given the time pressure. On Thursday, I quoted Kevin Book of ClearView Energy Partners as saying, “Tweets travel at the speed of light; barrels move at 10 knots.” To which we can add that the novel coronavirus moves at an exponential pace. Distancing measures mean demand in April could be down by 20 million or 30 million barrels a day. Hence, a cut of 10 million barrels a day would only extend the timeline for storage filling up and, in order to work, would have to happen very quickly.
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