2Q rebalancing of supply/demand is beyond the reach of even an expanded OPEC+ group production cut, suggesting oil will struggle for traction without a pickup in demand.

Much hope was pinned on therapeutics accelerators and an eventual cure to sanitize the world of COVID-19 to drive that demand.

With Remdesivir flopping in its first trial, hope that the current economic headwinds could prove transitory also flopped. And growth assets like oil were smacked with the butt end of the ugly stick into the NYMEX close.

With memories of the May 2020 contract violent settlement crash fresh in oil investors’ minds, they remain even more spooked by any negative news due to the unresolved market surplus that will hit unalterable storage capacity in the coming weeks.

Not only don’t retail investors want to venture into settlement week but, no one wants to pay the contango (carry) to keep oil positions in their pocket, especially with no end in sight to the storage /demand problem.

It’s probably going to be a case of “Whatever you’re sellin’, I ain’t buyin'” all over again come June rolls.

Thankfully, USO has spread out delivery risk through other contacts reducing some front-month pressure. Still, the negative impact of investors rolling their long positions from June to July in early May could present a bridge too far with USO rolls scheduled to swap between May 5-8.

There’s simply not a lot of wiggle room to play June as the big bosses upstairs will be spying the oil trading desks come early May. They will ensure prudent risk management policies will take precedence over risk-taking adventures into the June expiry date; in other words, positions are flat or rolled to July or beyond.

Overall, I think we’re going to see reduced participation in oil markets as retail look for different options to trade even more so as the Caixin story circulates after investors in a crude futures product sold by Bank of China Ltd. (BoC) lost millions of yuan in the collapse of global crude prices.

International markets analysis and insights from Stephen Innes, Chief Global Market Strategist at AxiCorp