Over the weekend, a coalition of nearly two dozen oil-producing countries agreed to withhold 9.7 million barrels a day from markets. Members of OPEC and others, including Russia and Mexico, announced Sunday that they have agreed to cut production in May and June. This is reported to be the the deepest cut ever agreed to by OPEC+. After the production cuts, the group will again ramp up production until the agreement expires in April 2022.
It is unclear if this level of coordinated cuts is enough to erase the glut given the decline in global demand spurred by the spread of the novel coronavirus. According to the Wall Street Journal, Global demand for crude is normally around 100 million barrels a day. Estimates of the decline vary widely and change daily, but most put current demand at 65 million to 80 million barrels a day. In volume and percentage, the fall exceeds the collapse of 1979 to 1983. It occurred over four weeks, not four years. (View the full article in the WSJ)
“The global oil industry is experiencing a shock like no other in its history,” said Fatih Birol, executive director of the International Energy Agency.
According to the EIA, U.S. petroleum product consumption has gone from 21.86 Million BPD on March 6th,2020 to 14.46 Million BPD on April 3rd, 2020.