Talk of a potential deal among the world’s major oil producers to cut supply by historic proportions caused crude futures to skyrocket this week.
The development began Thursday with a tweet by President Trump raising expectations that OPEC and Russia could strike a deal that would lift oil prices after recording a 65% decline in the first quarter.

Source: CME Group, ICE Europe
The outcome is hardly certain and details are sketchy at best, but the turn-of-events has overshadowed other news.
In case you missed them, here were some other important news items this week:
China
China’s government will reportedly start buying oil to fill up its strategic petroleum reserve (SPR), eying the plunge in oil prices as a buying opportunity.

Source: Ursa
The target is the equivalent of 90 days of net crude imports, which works out to 900 million barrels, according to Bloomberg calculations. The bar could be doubled if it includes commercial stocks.
Ursa measures floating-top tanks around the world, including China, every week using radar satellite imagery.
China’s crude inventories were roughly 890 million barrels (67% capacity utilization), according to our latest measurements.

Source: Ursa
It’s estimated that China will purchase 80 to 100 million barrels in 2020 for this purpose.
That won’t be enough to offset the sharp drop in oil demand, caused by the unprecedented slowdown in movement of people and goods around the world.
But there are signs in China of economic activity returning to normal, a turnaround from earlier this year.
Crude inventories in a key refining region have fallen, suggesting a pick-up in oil demand.
In Shandong Province, home to most of China’s independent “teapot” refineries, crude inventories rose for 14 straight weeks, reflecting demand destruction caused by the coronavirus.
For the last two weeks, however, Shandong crude inventories have fallen, likely driven by greater refinery activity.
For the week ending April 2, Shandong inventories were almost 140 million barrels, which was 2.8 million barrels less than a week earlier and 7.4 million barrels less than two weeks prior.
This marks a reversal after nonstop builds starting in December pushed Shandong to more than 147 million barrels (69% capacity utilization) March 19, the highest level since our coverage of these sites began in 2017.

Source: Ursa
The same trend has been visible in total China inventories. Consistent builds since February pushed levels to all-time highs the week ending March 26, but fell slightly the following week.
Europe
A different picture is emerging in Europe where the continent remains on lockdown.
Europe’s largest refinery, the Shell-owned Pernis refinery (404,000 barrels per day) in the Netherlands, will begin repairs in mid-April, according to OPIS.
The start date is earlier and the maintenance period longer than planned, as a result of depressed demand.
Major refineries cutting runs include the 270,000-b/d Fawley plant (UK’s largest), the 133,000-b/d Fos-Sur-Mer facility (France), the 239,000-b/d Port Jerome refinery (France) and 230,000-b/d Mongstad plant (Norway), according to OPIS.
The impact on European crude inventories hasn’t yet materialized like in Asia, for example. However, European inventories have increased the last two weeks, mostly on account of sites along the Mediterranean.
Elsewhere, in India, where 1.3 billion people are being told to stay home, Indian Oil Corp (IOC), the country’s top refiner has cut runs by 25%-30%.
Is there any hope of the market rebalancing on the supply side? All eyes are on OPEC oil ministers and Russia to take action next week.

Source: ICE Europe
The group will discuss possible production cuts via video conference, rather than the typical in-person meeting with hordes of reporters and camera crews.
What’s even more unusual is the chatter about the invite list including US and Canadian producers.
Canada
As bad as things are for US shale producers, things are even worse in Canada, at least as far as prices are concerned.
The benchmark price for Canadian crude fell to an all-time low this week. Western Canadian Select (WCS) settled Tuesday at $5 per barrel, a discount of $15/b to WTI Cushing.
WCS has historically traded for less than WTI which is lighter and closer to refining hubs than its Canadian counterpart.

Source: RBN Energy
Canadian producers have responded to lower prices by cutting drilling expenses, similar to US shale companies, a move that will result in less production.
If you’re interested in following these trends, sign up here for an evaluation of our data.