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31FX Blog

Oil Prices Still Bearish; OPEC+ Faces Pressure To Cut Supplies

The CoVid-19 outbreak remains the major stimulus for the poor performance of oil prices in the market since the start of the year.

It has negatively affected the travel industry with projected losses amounting to $113 Billion in revenue. OPEC+ struggle to come up with a decision to support the prices which continue to reach fresh new lows by this week.

Oil prices rose on Monday (March 2, 2020) for the first time since last week due to central banks’ explicit sentiments to support their local economies by evaluating cut rates. Expectations from stakeholders and leaders who were scheduled to meet by Monday to announce deeper output cuts also gave hope for the bulls and created a 450-point movement for the first day of the week.

March 2, 2020

WTI – Previous: 43.33 Present: 48.13

Brent – Previous: 48.69 Present: 54.02

Prices rebound by Tuesday as OPEC members are set to meet by the end of the week for a formal talk on proposals to cut supplies. Russia, member of OPEC+ expressed support to any decision from OPEC but has since remained reluctant to sign the deal. The Federal Reserve also played a part in the oil prices for the day as reports circulated that they had an emergency rate cut to support the current dismal situation. Optimism among investors is boosted and pushed the prices up but still in a long-term downward trend.

For the third week in a row, oil inventories continue to report average growth and increased less than expected last week; 785,000 as reported by This comes as a quiet surprise as the market expects worse results in connection to the coronavirus outbreak; analysts pictured a build of 2.64 million barrels.

On Thursday, the market awaits the decision for output cuts from OPEC+. The group proposed an additional 1.5 million barrels per day cut to accommodate the huge demand loss. Russia’s sentiments are unclear on whether they will accept it or not. The proposed cut will include Russia and other non-OPEC allies and are still awaiting further instructions as to when and how it will affect their local economies.

Russia made it clear by Friday after OPEC’s 2-day talk that they will not proceed with the output cuts. The decision brought implications to Russia’s relationship with other country members as they are relying on its active participation so oil could reach a conservative floor price. The cuts are also proposed to last until the end of the year to stabilize the situation. Non-OPEC members are also being required to cut 500,000 barrels per day.

March 6, 2020

WTI – Previous: 46.23 Present: 41.62

Brent – Previous: 50.69 Present: 45.45


Russia’s reluctance to participate on the cuts generated negative sentiments among investors. Also, if approved, it will be the biggest curb in production since the financial crisis in 2008. Goldman Sachs said that the second quarter will face a huge global oil market surplus, furthering the bearish trend in the coming weeks. Market corrections for the oil market are inevitable but we are still facing a continued downward movement if supply cuts will remain a part of hushed talks. It is highly recommended to take advantage of the cheap prices and get into position before the rally starts.

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