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The two countries agreed in principle to lead a 23-nation coalition in massive oil-production cuts after a monthlong feud devastated oil prices. But Mexico abruptly exited the talks, jeopardizing a final pact.
US President Donald Trump said Thursday that Russia and Saudi Arabia are "close" to agreeing on production cuts to prop up oil prices. Trump said he would be having further discussions on the oil market crisis later Thursday. "There's not enough room to even store it," Trump said of the surplus oil around the world.
OPEC+ has agreed in principle to a two-month production cut that will take 10 million barrels of oil from the market each day. Of that figure, Saudi Arabia will cut 3.3 million barrels from its output and Russia will pare 2 million from its daily production.
Oil prices briefly traded higher on Thursday after OPEC+ members, including Russia and Saudi Arabia, reached a preliminary deal to cut oil output. The deal is to cut oil production by 10 million barrels per day for two months beginning May 1, according to Amenda Bakr, deputy bureau chief at Energy Intel. The oil producers would then cut production by 8 million barrels per day from July to December and 6 million barrels per day for the period of January 2021 to April 2022.> The agree to Adjust downwards their overall oil output by 10 mb/d, starting on 1 May 2020, for an initial period of 2 months. For the subsequent period from July to December 2020, an adjustment pf 8 mb/d followed by 6 mb/d of total for the period of Jan2021 to April 2022 OOTT> > -- Amena Bakr (@Amena__Bakr) April 9, 2020Earlier Thursday, Brent crude gained around 10%, reaching $36.04 a barrel. The commodity was last seen trading down 2.71% at $31.95. The volatility is expected to continue as the coronavirus outbreak and resulting slowdown in economic activity put downward pressure on oil demand. In March, the OPEC meeting ended in a Saudi-Russia price war.On April 2, President Donald Trump applied pressure on Saudi Arabia and Russia to slash oil production. This spurred the Saudis to call for a meeting aimed at reaching a fair oil deal.The OPEC meeting was still in progress at the time of publication. Price Action The United States Oil Fund LP (NYSE: USO) was down 7.26% at $4.98 at the close Thursday, while the Direxion Dly S&P Oil&Gs Ex&Prd Bl 3X ETF (NYSE: GUSH) closed 0.7% higher at $24.51. Occidental Petroleum Corporation (NYSE: OXY) shares were down 1.48% at $15.36 at the close and gaining back 0.85% in the after-hours session. Exxon Mobil Corporation (NYSE: XOM) shares were down 1.66% at $43.13 at the close and Apache Corporation (NYSE: APA) shares were p 7.97% at $8.20 at the close and gaining another 2.56% in the after-hours session. Related Links:Oil Market Continues To Leak, Analyst Says It Needs RebalancingOil Prices Rebound, Analyst Says Market Faces Tsunami Of SurplusSee more from Benzinga * Oil Market Continues To Leak, Analyst Says It Needs Rebalancing * Oil Claws Its Way Back Up, Analyst Projects Startling Q2 Surplus(C) 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
A Rystad Energy analysis shows that Canada is the oil producer most affected so far, with the damage estimated to reach above 1.1 million barrels per day (bpd) in shut-in production in the second quarter of 2020
Oil futures prices settled sharply lower on Thursday after surging earlier on hopes over a deal between OPEC and its allies to cut production. The U.S. has been taking market share from OPEC and Russia in the past few years as major advances in shale drilling have made America the largest oil producer in the world.
U.S. crude-oil prices staged an about-face on Thursday, closing 9.4% lower after enjoying double-digit gains at the session peak, as the energy market reacted to torrid updates on expected production cuts by major oil producers to stabilize battered prices. West Texas Intermediate crude for May delivery ended down 9.3% at $22.76 a barrel after rising more than 10% earlier in the session. Those losses came as crude investors worried that the proposed cuts from the virtual meeting of OPEC+ were viewed as insufficient to address a major hit to demand due to the pandemic derived from the novel strain of coronavirus. Although, reports have indicated that Saudi Arabia and Russia will cut 10 million barrels a day of oil output for two months. Bloomberg News reported that reduction compares with estimates for demand loss of as much as 35 million barrels a day. OPEC and other producers will meet again on Friday to extract further cuts in output.
(Bloomberg) -- Alberta Premier Jason Kenney said the idea of the U.S. and Canada placing tariffs on OPEC crude imports is gaining traction as a way to protect North American energy producers from the market’s collapse. Kenney said he spoke with U.S. Energy Secretary Dan Brouillette for 40 minutes on Monday, and the Canadian, American and Mexican energy ministers are speaking on Thursday about a potential coordinated approach to saving the North American energy industry.“If OPEC+ does not stop the madness, we will be redoubling our push for coordinated import tariffs on OPEC and foreign oil into North America,” Kenney said in response to reporters’ questions Thursday. “That’s something our federal governments could do, and I’m getting a very receptive response on that from both Washington and Ottawa.”Russia and Saudi Arabia agreed in principle to unprecedented production cuts at a OPEC+ meeting Thursday. It’s still unclear what they will ask from countries like the U.S. and Canada at a G-20 meeting on Friday. The U.S. has insisted that it will just let market forces reduce its record production as shale explorers shut in wells. Alberta, home to the world’s third-largest crude reserves, already has an output curtailment program in place. For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- With Saudi Arabia and Russia agreeing on the contours of an unprecedented plan to slash crude output, President Donald Trump is on the verge of getting the global oil deal he wanted -- without taking steps to ratchet down U.S. production.The tentative agreement -- which would be the largest-ever oil output cut agreed on by OPEC+ ministers -- is coming without the U.S. mandating curbs on its own crude production. And if Trump agreed to anything in phone calls with the Saudis and Russians in recent days, those deals haven’t been made public yet.In other words, Trump may win a global oil agreement by letting the market work.“The U.S. is already effectively cutting because we cut in response to market force,” said James Lucier, managing director of research firm Capital Alpha Partners LLC. “We’re not a state oil corporation; we’re not government-directed producers of oil. U.S. oil production has an automatic response to excess supply, which is to shut in” that production.The Trump administration is likely to take that argument to a virtual meeting of Group of 20 energy ministers Friday, as non-OPEC countries face pressure to come up with another 5 million barrels per day in oil production cuts.For more than a week, Trump has talked up the prospect of a Russia-Saudi agreement to reduce oil output by at least 10 million barrels per day. He resisted calls to force deep cuts in U.S. crude production in tandem with Middle East producers.Instead, the president and top administration officials repeatedly made the case that the free market is already paring oil production in the U.S. -- without the government lifting a finger.“The cuts are automatic if you are a believer in markets,” Trump said Monday. The president doubled down on that free-market talk Wednesday night, on the eve of Thursday’s OPEC+ summit. U.S. oil production already has been “cut back automatically,” Trump told reporters.Energy Secretary Dan Brouillette pushed that argument too, emphasizing that the global crude price collapse has already caused U.S. oil companies to idle rigs and curtail drilling. And the Energy Department offered numbers to prove its case. A short-term outlook released earlier this week underscored that 2 million barrels per day of oil production are already expected to be lost -- without any government intervention.Of course, Trump also has limited tools to force production cuts. He could quash 2.9 million barrels per day of oil production by halting the activity on federal lands. And a ban on U.S. crude exports could take care of another 3 million to 4 million barrels per day, according to Rapidan Energy Group.Trump’s laissez-faire approach has been “an effective bargaining position,” Lucier said. If Russia and Saudi Arabia say they want the U.S. to cut output too, the U.S. can effectively counter we’re doing it already, and “you need to match us, rather than we need to match you.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Trump was speaking fresh from a conference call with Russian President Vladimir Putin and Saudi leader Crown Prince Mohammed bin Salman -- both countries being key players in the talks. The video conference meeting of OPEC countries and their OPEC+ allies including Russia, as well as other key non-members, began just after 1440 GMT on Thursday. Venezuela's state oil company PDVSA said in a statement Caracas "supports the proposal of Saudi Arabia and Russia to reduce production by around 10 million barrels per day".
HollyFrontier's (HFC) Lubricants and Specialty Products segment is scrapping 2020 outlook for Rack Forward due to flagging global market demand.
OPEC and other oil producers will debate on Thursday oil cuts as big as 20 million barrels per day, equivalent to about 20% of global supplies, one OPEC source and a Russian source told Reuters. "That is a global deal," the OPEC source said. Another OPEC source and a separate Russian source told Reuters that Russia and Saudi Arabia had managed to remove their main obstacles to agreeing a new deal on oil cuts.
Oil importing countries may announce crude oil purchases to support crude demand which has tumbled as a result of the coronavirus crisis, International Energy Agency Executive Director Fatih Birol told al-Arabiya TV on Thursday. "We may hear tomorrow (Friday) countries purchasing crude to build up their strategic (reserves) and support demand," Birol said, according to the al-Arabiya television channel. "We will see a recovery of demand in line with the resolution of this problem and the return of the global economy, but I don't expect a very quick recovery of oil prices," he said.
European oil majors bottomed on March 18, whereas Brent oil prices kept making lower and lower lows until April 1. As the rest of the energy sector got smashed, including leveraged U.S. shale and larger cap U.S. oil majors, European oil majors like Royal Dutch Shell , Total , Equinor , and ENI kept getting bid higher and higher for two weeks consistently. After years of being in perennial decline, oil majors have just never been able to see higher earnings or stock prices regardless of higher oil prices given their lack of leverage and declining profit margins.
Just over 6.6 million Americans filed for unemployment benefits last week, the Commerce Department said, as the coronavirus pandemic continues to wreak havoc on the world's biggest economy.
Palm oil producers must brace for crude palm oil prices to fall sharply as coronavirus-led lockdowns around the world curb consumption and boost stocks, said leading industry analyst James Fry. As the lockdowns shuttered restaurants, many industry players had expected that demand for palm oil, used in everything from instant noodles to shampoo, would remain relatively well supported.
Top oil producers meeting later Thursday intend to cut production by between 10 and 15 million barrels per day, Kuwait's Oil Minister Khaled al-Fadhel reportedly said. The talks between OPEC and other major producers come as oil languishes at near-two decade lows, with Russia and Saudi Arabia's price war compounding slack demand caused by the coronavirus pandemic. "Through our continuous consultations in the past weeks, I confirm that the intention is to conclude an agreement to cut production by a large amount ranging between 10 million bpd and 15 million bpd," Fadhel said in an interview with Kuwaiti daily Al-Rai published Thursday.
(Bloomberg) -- Oil is set to tumble back toward $20 a barrel as global producers will likely fall short of targeted cuts this week, leaving a supply overhang that will threaten to overwhelm global storage, according to ING Groep NV.Oil giants including Saudi Arabia and Russia are likely only going to be able to cobble together a global agreement to curb 6 million to 7 million barrels a day of supplies, said Warren Patterson, ING’s head of commodities strategy. That’s more than triple what OPEC+ was cutting at the start of this year but is short of the 10 million barrels a day or more that U.S. President Donald Trump proposed last week.It’s also well shy of the loss in demand of about 15 million barrels a day in the second quarter caused by government lockdowns to stop the spread of the virus, Patterson said. Brent crude, which has already plunged 50% this year, will crater further as storage is maxed out.“I’ve been looking at commodity markets now for a little over 10 years and I’ve never seen anything like this,” said Singapore-based Patterson in a telephone interview. “The scale of demand destruction that we’ve seen in the market is just shocking.”ING, the Amsterdam-based bank that finances commodities across the value chain, sees Brent crude averaging $20 a barrel in the second quarter before rebounding to $45 in the fourth quarter. Futures traded at $33.34 on Thursday.Patterson doesn’t think the U.S. will be given a direct mandate to cut a specific volume because of its antitrust laws, but the country will still contribute output declines as drillers halt activity because of low prices. Russia wants the U.S. to do more than an organic drop in production, but will ultimately accept it as part of a larger agreement, he said.ING sees Saudi Arabia cutting 3 million barrels a day and Russia 1.6 million. Other OPEC members and countries like Canada will contribute enough cuts to get to 6 million to 7 million barrels a day, but Patterson said he doesn’t see a way they can add enough to get to 10 million.Top producers are set to meet on Thursday, followed by a meeting of G-20 energy ministers the following day.Amid the gloominess in markets, Patterson remains constructive on precious metals, with gold seen as having the most upside across the commodities complex in the second quarter. Prices are expected to average at $1,700 an ounce during this period and could even test the previous record of $1,921.17 seen in 2011 in the next two to three months, although it’s unlikely to remain at that level, he said.“We have also seen quite a bit of increased volatility in gold prices over the last month or so, but I don’t think that diminishes its appeal as a safe-haven asset,” said Patterson. “Given the level of uncertainty that we’re currently experiencing and also the fact that if you look around the globe, there’s basically not a central bank which is not easing -- that all sort of has quite supportive fundamentals for gold.”Gold has been on a tear, trading near the highest level in more than seven years, as investors spooked by coronavirus-related market meltdowns and economic angst clamor for the traditional haven. Holdings in bullion-backed exchange-traded funds are at the highest ever, and prospects for the precious metal have also been supported by global stimulus measures aimed at shoring up growth, including the Federal Reserve’s unlimited quantitative-easing program. Spot gold traded at $1,648 an ounce on Thursday and is up almost 9% this year.Patterson also commented on industrial metals and iron ore:Among the base metals, ING is most constructive on nickel due to a growing market deficit as a result of rising demand in the battery sector, and sees an average price of $13,500 a ton by the end of this year.Patterson is bearish on zinc, which he sees averaging at $1,880 a ton over the fourth quarter. Further downside is seen between now and then, with prices expected to drop to $1,800 as smelters maximize refined output due to attractive treatment charges.Iron ore is seen averaging $85 a ton in the second quarter on rising demand in China, but will trend lower to average $75 by the end of year on continued improvement of supply from major producers such as Vale SA.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Spot gold jumped 2% at $1,678.53 per ounce by 11:19 a.m. EDT (1519 GMT), having earlier hit its highest since March 9 at $1,684.84. U.S. gold futures soared 3% to $1,734.20. "The Fed unveiled yet another howitzer from its arsenal offering substantial relief to small and medium sized businesses as well as municipalities," said Tai Wong, head of base and precious metals derivatives trading at BMO.
OPEC, Russia and other allies outlined plans on Thursday to cut their oil output by more than a fifth and said they expected the United States and other producers to join in their effort to prop up prices hammered by the coronavirus crisis. The planned output curbs by OPEC+ amount to 10 million barrels per day (bpd) or 10% of global supplies, with another 5 million bpd expected to come from other nations to help deal with the deepest oil crisis in decades. Global fuel demand has plunged by around 30 million bpd, or 30% of global supplies, as steps to fight the virus have grounded planes, cut vehicle usage and curbed economic activity.
U.S. President Donald Trump said on Wednesday U.S. oil producers have already cut production and he had many options if Saudi Arabia and Russia do not reduce their output when they and other exporters meet on Thursday. "Look, we already cut," Trump told reporters when asked if the United States would consider a coordinated production cut.