China On A Massive Oil Buying Spree Buying Oil At Low Prices
o Trump seeking truce between OPEC+ members
o Oil price led by WTI are trying to stabilize
Phil Flynn, The Phil Flynn Energy Report
via Futures Magazine - March 24, 2020
The Dollar Is Thicker Than Oil
Oil prices are starting to bottom despite the potential of the most significant supply glut in history. The reason is that the power of the dollar is supreme over the supply of oil. In other words, you cannot underestimate the power of the Federal Reserve's historic and unprecedented amount of stimulus to, at some point, create demand where now it is nonexistent. QE unlimited as the Fed announced that, "Previously, it had announced it would buy $500 billion worth of Treasury's and $200 billion in mortgage-backed securities.”
Rystad Energy reported that, on average, 76% of the world's oil storage capacity was already full, and current average filling rates indicated by balances were unsustainable. Although oil storage filling up and gas demand is parked, the market is starting to anticipate a Fed fueled oil demand surge in just a matter of months.
Feeding that optimism this morning are reports that deaths from the coronavirus in hard-hit Italy are starting to fall. President Trump wants to get the economy up and running soon. President Trump said the cure couldn't be worse than the disease. "Our country wasn't built to be shut down. This is not a country that was built for this.”
China has been on a massive oil buying spree buying oil at low prices and that is also lending support. Wuhan, the epicenter of the virus, is reopening for business. So while the fundamental picture in real terms looks very bleak for oil, the charts are looking like its bottomed.
Massive stimulus and producers outside of OPEC will be forced to cut back supply. There is also speculation that the U.S. and Saudi Arabia may work together and conspire to prop up oil prices...