The U.S. House of Representatives passed the economic stimulus plan which over $2 trillion on Friday, however, it did not have much support for the weak oil market. U.S oil price (WTI) fell below $23 on Friday and gapped down today morning, reached the low of $21.7.
The global epidemic of new coronavirus was not yet under controlled. Countries have announced state of emergency, implemented measures to limit people’s activities, which is seriously disrupted the demand of energy, overwhelming global stimulus measures. The International Energy Agency (IEA) said on Thursday that due to the epidemic, 3 billion people were “blocked” in the world, and global oil demand may fall by 20%, that is 20 million barrels per day. The IEA called on Saudi Arabia of the OPEC to help on stabilizing the oil market.
Analysis indicated that, due to the sudden drop in oil demand, there is no such demand at all for the extra production by Saudi Arabia, making the goal of seizing market share becoming unclear. Kirill Dmitriev, the head of Russian Direct Investment Fund, told Reuters that if other countries join, OPEC +, OPEC and its allies, may reach a new supply agreement.
However, the current attitude of Saudi Arabia and Russia is uncertain. It is afraid that oil prices will trade below $30 for a period of time, and US oil (WTI) may even fall below $20.