On April 9, the OPEC + special meeting came to an end. Its production reduction was lower than the market expectation. Oil prices fell again. WTI settlement in the United States was 22.76 yuan / barrel, down $2.33. Brent crude settled at $31.48 a barrel, down $1.36. Crude oil jumped up and down in the market, first rising and then falling. During the meeting, WTI rose to $28.36/barrel, or 12%. Later, OPEC + announced the details of production reduction, and market participants turned to bearish, doubting whether the production reduction could be large enough to cope with the decline in demand caused by coronavirus. Crude oil reversed its previous gains and fell more than 9%.

The details of the novel coronavirus pneumonia agreement are as follows: OPEC, a OPEC and its allies, agreed to cut production by 10 million barrels per day in May 2020 and June to help support oil prices hit by the new crown pneumonia epidemic. It is also confirmed that the production will be reduced by 8 million barrels / day from July 2020 to December, and 6 million barrels / day from January 2021 to April 2022. OPEC also said it would hold its next video conference on June 10 to assess market conditions.

The market generally does not buy this result, and was earlier boosted by the news of production reduction, and the market has digested the benefit in advance. On the eve of the meeting, the market has been concerned about whether the meeting can reach an agreement to reduce production by 10-15 million barrels / day. There is also general confidence in the intensity of OPEC + production reduction. The U.S. energy secretary also publicly said that OPEC + may achieve a record production reduction this time, but in terms of the details of the announced production reduction, it is obviously not up to market expectations. During the meeting, OPEC + paid special attention to whether non OPEC countries such as the United States, Canada and Norway would take production reduction actions, but there is no public conclusion in this regard. This is a hidden danger to the implementation of OPEC + production reduction in the later stage.

From the perspective of demand, at present, the global epidemic is still in the stage of rapid spread. Market experts generally believe that it may last for a long time in the later period. Some institutions predict that the decline of crude oil demand in April will exceed 20 million barrels / day, or even 30 million barrels. The reduction of demand is used to measure the output reduction of OPEC +, and this agreement obviously does not have a turning force on the market. In addition, at present, we need to consider the issue of inventory. At present, the global crude oil inventory has risen to a record high. In the next few days, the global crude oil storage capacity may be exhausted, which is very unfavorable to the oil price. The business community expects that the oil price will remain low in the near future. In the medium and long term, it depends on the development of the epidemic situation. In the context of the contraction of economic activities in Europe and the United States, it is difficult for the oil market to be fundamentally good.