FXEMPIRE
All
Ad
Corona Virus
Stay Safe, FollowGuidance
World
95,480,678Confirmed
2,039,607Deaths
68,167,725Recovered
Fetching Location Data…
Advertisement
Advertisement
Vladimir Zernov
Crude Oil

Oil Video 07.04.2020

Advertisement

Most Likely, U.S. Will Have To Participate In The Production Cut Deal

The key topic of this week is the negotiations about the oil production cut deal. Previously, oil prices surged on hopes that major oil producers would cut production by 10 million barels per day (bpd) but then pulled back when the meeting of OPEC+ countries was postponed from April 6, 2020 to April 9, 2020.

Advertisement
Know where WTI Crude Oil is headed? Take advantage now with 

75% of retail CFD investors lose money

According to various media reports, Saudi Arabia, Russia and other OPEC+ members want the U.S. to cut oil production as well. In addition, countries like Canada and Brazil will most likely have to participate in the deal.

It remains to be seen whether the U.S. will join the production cut deal. Previously, the U.S. signaled that it was ready to impose tariffs on foreign oil if the oil production cut deal did not work out.

U.S. President Donald Trump has recently mentioned that oil production cuts in the U.S. were happening automatically because of low prices but did not elaborate on whether the country was ready to participate in a coordinated action to improve supply/demand balance.

It looks like both Saudi Arabia and Russia are serious about demanding production cuts from U.S as there is zero sense for leading oil producers to cut production if U.S. oil companies do not participate in the deal but profit from improved oil prices.

Saudi Arabia And Russia Try To Determine From Which Level To Cut Production

Russia did not increase its oil production in April because the market was already awash in oil. At the same time, Saudi Arabia followed a different strategy, and increased its oil production levels to gain market share.

Now, both countries are debating whether any upcoming production cut should be based on average first-quarter production levels or on current production levels. Of course, Saudi Arabia wants to cut its oil production from current levels since it has materially increased its oil production right after the previous OPEC+ deal ended at the end of March.

This is another obstacle on the way to an oil production deal. I believe that other countries would not tolerate Saudi Arabia’s plan to base its oil production cuts on current production levels. We’ll see whether Saudi Arabia is serious about this plan, especially given the fact that the U.S. is its important ally. For now, Saudi Arabia’s desire to keep as much oil production as it can serves as a bearish near-term catalyst for oil.

Don't miss a thing!
Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Trade With A Regulated Broker

  • Your capital is at risk
IMPORTANT DISCLAIMERS
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
RISK DISCLAIMER
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.
FOLLOW US