Oil prices mixed as supply-demand imbalance persists -Rystad Energy comments

Prices are mixed on Wednesday morning and only changed marginally as the market is now digesting the developments of the last few days. Seeing a small increase during the day is normal after yesterday’s losses and on intentions from the US government to terminate the lockdown soon.

However, It has become clear that for prices to recover their lost healthier levels more action is needed to bridge the demand-supply imbalance.

Although the announced OPEC+ cuts helped protect prices from further rolling down the 20s or lower, there is still a significant imbalance. Some countries in Europe have extended their lockdowns, which depresses demand further and the market now can only hope for Strategic Petroleum Reserve Purchases and further cuts by independent non-OPEC countries to bring supply and demand closer.

It is also normal for prices to fluctuate slightly during the day, as different indications and hints from companies and governments about coming developments tend to boost or depress trader hopes.

Our view is that, unless there are further production-curbing measures soon, storages around the world are mathematically certain to fill up in coming months which can still force many facilities to face shut-ins and depress prices further. For now, the OPEC+ deal has only succeeded in postponing the problem and buying producers time to prepare.