Pepperstone logo
Pepperstone logo
  • English (UK)
  • Ways to trade

    Pricing

    Trading accounts

    Trading hours

    24-hour trading

    Spread betting vs CFDs

    Maintenance

  • Trading platforms

    Trading platforms

    TradingView

    MetaTrader 5

    MetaTrader 4

    Pepperstone platform

    cTrader

    Trading integrations

    Trading tools

  • Markets

    Markets to trade

    Forex

    Shares

    Indices

    Commodities

    Currency Indices

    Dividends for Index CFDs

    Dividends for Share CFDs

    CFD Forwards

    ETFs

  • Market analysis

    Market news

    Navigating Markets

    The Daily Fix

    Meet the Analysts

  • Learn to trade

    Trading guides

    CFD trading

    Spread betting

    Forex trading

    Commodity trading

    Stock trading

    Technical analysis`

    Day trading

    Scalping trading

    Candlestick patterns

    Upcoming IPOs

    Gold trading

    Oil trading

    Webinars

  • Partners

  • About us

  • Help and support

  • Professional

  • English (UK)
Oil

3 things to watch out for at the emergency OPEC+ and G20 meetings

9 Apr 2020
Share
Last week, we suggested that oil was due a technical rebound and we might see concerted pressure by the US to stabilise the market. Since then, President Trump sparked a record rally after suggesting that Saudi Arabia and Russia would agree to remove 10m-15m barrels a day (b/d) of oil supply. The two countries are now due to meet Thursday, after OPEC’s initial meeting with Russia scheduled for Monday this week was postponed. We focus on three key areas to look out for, with the meeting potentially having a big impact on not just oil markets, but equities as well.

1. Saudi Arabia and Russia agreement?

A war of words between Riyadh and Moscow has deepened in recent days, with both accusing each other of causing a price war to hurt the US oil sector. Recall that Saudi Arabia moved to flood the market last month after Russia refused to make further cuts to production, before the extent of the lockdown measures was fully understood. WTI prices still remain down by more than half since January, even with the record weekly advance last week, as the global pandemic has crushed demand for oil by more than a quarter.

Currently, one idea is for OPEC+ to implement production cuts for at least three months from May to July, while other reports point to an OPEC cut of 10m b/d a day until the end of the year. However, both producers have signalled that the massive cut touted by President Trump should involve the US as well.

In reality, the issue may be too big for the Saudis and Russians to solve alone. Even if they cut 10m b/d a day, which equates to roughly 10% of global demand before the crisis, the market would still be oversupplied, resulting in prices turning lower once more.

2. US involvement – ‘whatever I have to do’

The current low-price environment is too low for US producers and this is highlighted by President Trump’s concern as well as the huge slowdown in drilling activity seen over the past few weeks. The big question is if Russia especially, will accept a cut like this from the US which will inevitably feed through into the market only gradually, in place of an authorised cut.

With the prospect of mass job lay-offs and production shut-ins, once again President Trump’s next moves will be crucial. He has hinted that he may impose tariffs on oil imports and that military aid to Saudi Arabia could be on the line, which begs the question as to whether he is employing his usual combative tactics in negotiations to achieve some kind of ‘win’.

3. Can the G20 help out?

Saudi Arabia, as holder of the rotating presidency of the G20, has also convened a meeting with those countries for Friday. It is hoped the large oil producers in this group – including the US, Canada, Norway and Brazil – might assist in tackling the supply glut that is at least 25m b/d. Of course, many G20 members don’t produce much oil or are more reliant on imports and have little incentive for price rises as recession looms.

One possible avenue of stabilising the market would be for those consumers without their own domestic production to consider buying surplus oil to fill strategic stocks, which India and China have announced they will start doing in the near future.

Oil markets are clearly questioning whether OPEC+ cuts of 10m b/d will be sufficient to offset the demand collapse which is currently estimated to be in excess of 20m b/d by some forecasters. The May-June WTI spread is trading at a massive $5 discount, highlighting the pressure on the front end of the curve and stress on current physical storage capacity. All the pressure is on the major players to formulate a swift response to stop the industry becoming overwhelmed by supply and prices falling further to cause production shut-ins.

Ready to trade better?

Switch to Pepperstone now and join our global community of over 620,000 traders.5 Apply in minutes with our simple application process.

Apply now

The material provided here has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Whilst it is not subject to any prohibition on dealing ahead of the dissemination of investment research we will not seek to take any advantage before providing it to our clients.

Pepperstone doesn’t represent that the material provided here is accurate, current or complete, and therefore shouldn’t be relied upon as such. The information, whether from a third party or not, isn’t to be considered as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product or instrument; or to participate in any particular trading strategy. It does not take into account readers’ financial situation or investment objectives. We advise any readers of this content to seek their own advice. Without the approval of Pepperstone, reproduction or redistribution of this information isn’t permitted.

Other Sites

  • The Trade Off
  • Partners
  • Group
  • Careers

Ways to trade

  • Pricing
  • Trading accounts
  • Pro
  • Trading hours

Platforms

  • Trading Platforms
  • Trading tools

Markets and Symbols

  • Forex
  • Shares
  • ETFs
  • Indicies
  • Commodities
  • Currency indicies
  • CFD forwards

Analysis

  • Navigating Markets
  • The Daily Fix
  • Pepperstone pulse
  • Meet Our Analysts

Learn-to-trade

  • Trading guides
  • Videos
  • Webinars
Pepperstone logo
support@pepperstone.com
+442038074724
70 Gracechurch St
London EC3V 0HR
United Kingdom
  • Legal documents
  • Privacy policy
  • Website terms and conditions
  • Cookie policy

© 2025 Pepperstone Limited 
Company Number 08965105 | Financial Conduct Authority Firm Registration Number 684312

Risk warning: Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 74.8% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.

Trading derivatives is risky. It isn't suitable for everyone and, in the case of Professional clients, you could lose substantially more than your initial investment. You don't own or have rights in the underlying assets. Past performance is no indication of future performance and tax laws are subject to change. The information on this website is general in nature and doesn't take into account your or your client's personal objectives, financial circumstances, or needs. Please read our legal documents and ensure you fully understand the risks before you make any trading decisions. We encourage you to seek independent advice.

Pepperstone Limited is a limited company registered in England & Wales under Company Number 08965105 and is authorised and regulated by the Financial Conduct Authority (Registration Number 684312). Registered office: 70 Gracechurch Street, London EC3V 0HR, United Kingdom.

The information on this site is not intended for residents of Belgium or the United States, or use by any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.