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DOE Report + Macro Risk Off sends Oil lower

June 24, 2020

Crude Oil fell $2.36 to $38.01. The market was pressured by an increase in US production back to 11MMBpd from 10.5MMBpd last week, and weaker equities. The equity markets have reacted to increasing Covid cases in Germany and certain pockets within the US. Inventories were neutral, with all +/- 0.5MMBbl of expectations. Equity prices fell -2.5%. 

 

Crude Oil prices held the Control Pivot of $37.43 with an intraday low of $37.31. Until we see a clean close below the Control, Oil is still in a sideways range amidst this current uptrend. 

 

Equity prices, while generally supported by the Federal Reserve, are subject to asymmetric risk to the downside. This cautions R^2 to have oil producers hedge more aggressively through 1H2021. Should sellers take Control below $37.43, Producers will have less time to hedge than otherwise.  



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