June 8, 2020/Coronation Report

The confusing thing about oil prices is that, after the Organization of the Petroleum Exporting Countries (OPEC) and Russia agreed to production cuts in mid-April, prices continued to fall for a further two weeks. Since late April the price of Brent crude has more than doubled.

The reason for the continued fall during April was an unprecedented build-up in inventories: the reason for the subsequent rally is the restitution of the arrangement between OPEC and Russia, an arrangement similar to the one that led to remarkable stability during the three years 2017 to 2019 inclusive.

Are we heading back to normal, and a Brent crude price of above US$50.00/bbl?

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