has tumbled to a 21-year low and touched this century’s low. The spread between the US Crude and Brent has started to narrow. Nonetheless, the chances of Brent falling to zero, or below zero, are minimum. Having said this, the sell-off in oil is brutal, and it is highly likely that we are close enough to find a bottom.
Here is why:
There is no doubt that this could be a deal of century because if we look at the factors (that drive the oil price) beyond COVID-19, they haven’t altered much—I mean our daily consumption of oil. The world is still very much dependent on oil, and once we are through this storm (COVID-19’ influence on global growth), the demand will pick up.
The sell-off that has been trigged in the Brent prices today is highly likely to put more pressure on OPEC+ to cut the oi production more. Of course, it will be Suadi Arabia that needs to cushion the additional burden.
I believe it is likely that we may see another emergency meeting becoming a reality…