On April 14, international oil prices fell again, with WTI crude oil in the United States down $2.30 (-10.26%) to $20.11/ barrel. Brent crude fell $2.14 (-6.74%) to $29.60/ barrel. The main reason is that OPEC+ and other oil producing countries' production reduction agreements disappointed the market, the share of production reduction is difficult to offset the decline of fuel demand caused by the new crown epidemic, and the U.S. crude oil inventory increased significantly than expected, which increased the market panic atmosphere.

Since the beginning of April, the market has experienced a sharp rebound in crude oil in OPEC+ production reduction expectations. On April 2, crude oil rose by 25%. However, with the agreement framework of production reduction reached at the ministerial video conference of OPEC and Russia, the oil price on that day experienced an intraday surge of 12%. After the results of production reduction came out, it fell by more than 9%. The market has expressed disappointment with OPEC+ production reduction until On the evening of April 12, OPEC and other oil producing countries formally reached an agreement on production reduction. According to the agreement, the average daily production of OPEC and other oil producing countries will be reduced by 9.7 million barrels from May 1. The first round of production reduction will last for two months. Besides OPEC+, other oil producing countries led by the United States will jointly reduce production by 5 million barrels. It was also the largest production reduction agreement reached since the establishment of OPEC+ mechanism, but it still failed to calm the market sentiment under the epidemic of COVID-19. Oil prices fell again on the 14th.

According to SunSirs, at present, the demand side is still the root cause of controlling the crude oil market. The global epidemic has not been effectively controlled, and even some organizations have assessed that the decline of crude oil demand may reach 35 million barrels/ day. From this data, the share of production reduction of the global oil producing countries is not worth mentioning. In addition, at present, COVID-19 is gradually spreading, especially the market worries that India will become a new outbreak area in the later period. At present, India has implemented restrictions. India's crude oil demand in the Asia Pacific region is second only to China, and it is the third largest crude oil import country in the world. According to the agency's calculation, India's oil demand in April may be reduced by 3.1 million barrels/ day, down by 70%. However, China's data is better. With the resumption of production and the rapid recovery of demand, the data shows that China's crude oil import in March increased by 4.5% year-on-year, but the inventory pressure of Chinese refineries is also increasing day by day, and the import increase in the later period may be limited. Overall, the risk of global crude oil demand in the later period will still increase.

In addition, the market inventory data also contributed to the decline of crude oil. The data released by the American Petroleum Institute (API) on Tuesday showed that as of the week of April 10, crude oil inventory in the United States jumped 13.1 million barrels, analysts expected to increase 11.7 million barrels, and Cushing crude oil inventory increased 5.4 million barrels. In addition, affected by the collapse of demand and the surge of refined oil storage, the operating rate of refineries decreased, the refinery refining volume decreased by 1.2 million barrels/ day. It can be predicted that the increase of inventory will obviously bring about the rapid consumption of storage capacity. According to some analysis, the global crude oil storage capacity may be exhausted in the coming weeks. According to the report on April 13, the main oil trade center in the Middle East has no space to store extra oil, so the port of Fujairah in the UAE has been closed. In the later stage, more ports will not be excluded because they cannot hold more crude oil. According to SunSirs, if the epidemic does not end in a short period of time, global crude oil producers may change from active production reduction to passive production reduction to achieve the rebalancing of the crude oil market, mainly due to the depletion of storage capacity. The short-term downside risk of oil price still exists, and oil price will continue to be under pressure due to the control of epidemic situation in the medium and long term.

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