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OPEC+ reached an agreement to cut 9.7 million barrels per day (mb/d) beginning in May which is a record-breaking cut, but it still may not be enough to stabilize the market. U.S. Secretary of Energy Dan Brouillette said that the total number of cuts globally, when you add in all the non-OPEC countries, should be closer to 20 mb/d. In reality, the number is much smaller than that and will still have an impact, even if it’s not the cut some were expecting. The cuts will help prevent a complete meltdown, even if there is no immediate price rally. The deal is expected to stabilize the global oil price and reduce the market volatility according to Bank of America Merrill Lynch.

On the morning of Monday, January 6, 2020, WTI crude oil was nearing $64/bbl.  As of 10:31 a.m. EST on Thursday, February 27, 2020, WTI crude oil was trading at $46.36/bbl.  The shocking effects of the coronavirus fear continue to decimate global markets, particularly oil markets.  Fortune.com aptly points out that the coronavirus has done to the oil industry what the U.S. and China trade war, strikes on Saudi oilfields, Libyan supply outages, and a near war between the U.S. and Iran-could not.  The virus has thrown traders and analysts into complete turmoil.

If the quote "the trend is your friend" isn't the true narrative of the energy complex over the past 20 trading days, I'm not sure what other phrase may be used to depict exactly what we have witnessed.  WTI crude for August delivery has had a 20.15% rally from its lows on June 12th to its highs on July 11th with only seven opportunities to buy lower on the day and watch it rally over the following days.  

According to a survey by the Federal Reserve Bank of Dallas, the cost of profitably drilling a shale oil well in the US has fallen to a modern low of $50 per barrel, likely ensuring the growth of the onshore shale industry for years to come. The decrease reflects many factors including softer demand from refineries and concerns about the US-China trade war’s impact on global economic demand. The US oil benchmark is currently hovering near $63 per barrel. Cost reductions and increasing production should stop crude oil prices from rising to high.

After a sharp rally to begin the year, oil prices have been trading in a tight range over the past two weeks and are waiting for their next cue to determine price direction.