Below is a comment from Rystad Energy’s Oil Markets team

Oil prices were already at higher levels than they should be before the OPEC+ and the G20 meetings due to market enthusiasm and hopes for a solution to the crisis.

The pre-meeting levels were not justified by fundamentals, as the supply-demand imbalance was so large, that normally prices should have been much lower.

The higher-than normal levels of last week justify Monday’s market reaction. Although OPEC+ decided to reduce output by some 10 million bpd, cuts of such levels are not enough to bring back healthier price levels and were only sufficient to maintain prices largely unchanged.

The market has sobered up to the demand deficit and would not boost prices further. If, however, indications that G20 will join in with more cuts of up to an additional 10 million bpd prove true and take an official character, then we can expect a relative price recovery.

Still, due to the stock build that April will have accumulated by then, prices will not recover this year to pre-COVID-19 levels, even in a more balanced market, as I will take some time for the stocks to fall back.

After weeks of volatility, the market is now reacting with more caution to speculation and waits for concrete agreements to risk hiking prices to different levels.