Friday's Market Minute: All Hands On Deck

Today, OPEC will announce whether the organization and affiliated countries will cut oil production by 1.5 million barrels per day. The amount of the supply cut was announced after yesterday’s meeting, but pushback from Russia led to uncertainties that it might not become official. Crude oil futures (/CL) have fallen sharply this year along with the broader market as the COVID-19 outbreak spreads globally and threatens the demand for energy.

Late last month, the WTI futures contract fell below $50, and hasn’t recovered since. OPEC’s decision to reduce the global oil supply is related to the Federal Reserve and chairman Jerome Powell’s surprise interest rate cut earlier this week. The FOMC announced a 50 basis point cut to its federal funds rate target in an effort to buoy the struggling markets.

Globally, more governments’ monetary policies are following suit in a chain reaction. No one knows the scope of damage to the global economy this virus will cause, and it’s that uncertainty that’s causing a panic. But what we’re seeing out of OPEC and out of the Federal Reserve is an attempt to be unified; an attempt to ease volatility. It’s all hands on deck out there until we figure out what the heck is going on.

Image by C Morrison from Pixabay