Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Oil Swings Sharply as OPEC Agrees to Cut a Third of Demand Lost to Covid-19

Published 04/09/2020, 02:04 PM
Updated 04/09/2020, 04:50 PM
© Reuters.

© Reuters.

By Barani Krishnan 

Investing.com - Oil prices swung wildly -- rising 12% in early trade, then settling 9% lower, before paring losses in post-settlement trade -- as the OPEC+ alliance reportedly agreed to a 10 million-barrel-per-day output cut by June that would still cover only a third of the demand estimated lost to the coronavirus pandemic. 

West Texas Intermediate, the New York-traded benchmark for U.S. crude, was down $1.84, or 7.3%, at $23.25 by 4:45 PM ET (20:45 GMT). WTI had settled at $22.76 earlier, down $2.33, or  9%, on the day. The session high was $28.33.

Brent, the London-traded global benchmark for crude, was off 96 cents, or 2.9%, at $31.88. It finished the official trading session at $36.68, down $1.36, or 4.1%. Brent’s peak for the day was $36.38.

Oil pulled back some losses after The Wall Street Journal reported that the OPEC+ alliance will cut 10 million barrels per day of production by June, with Saudi Arabia and Russia contributing more than half of that.

Riyadh will cut 3.3 million bpd and Russia 2 million bpd, the Journal said.

Analysts said the demand loss from Covid-19 was between 20 million and 30 million bpd.

With the coronavirus pandemic reducing the big fanfare of the typical OPEC meeting in Vienna to a mere video hook-up, oil ministers from the Saudi-led cartel had to be content with a virtual meeting with their Russian and other allies. 

That also complicated the job of reporters, who instead of hogging the stairwell of the OPEC building in the Austrian capital to gang-press delegates coming out of the meeting room, had to communicate electronically with them and other sources to know what was going on.

Without an official communique or news conference, the reporting that emerged was as mixed as one could imagine, sending traders in all directions. 

As though things weren’t complicated enough, there were reports late in the day that Mexico, a smaller rival to the U.S.-sanctioned Venezuela but a significant oil producer, nevertheless, opposed any cuts to its already dwindling production.  

Mexico’s state oil company Pemex was reported to be sticking to plans to boost production, and doubling the number of its newly-drilled wells this year to 423, amid consistent declines in its oil production over the years.

“There are just so many conflicting versions coming out of today’s meeting that it’s not surprising at all that we’re back in the negative after jumping 12% earlier,” said Tariq Zahir at the oil-focused Tyche Capital Advisors in New York.

Latest comments

prices pretty close to production costs ,thats when all the shorts fly out the window, when greedy traders take over energy companies and drive the price up on some made up reason
This cut is not enough. This is just a window dressing and Trump knew it already that is reason why USA didn’t want to present the meeting. Trump just needed to click on ZOOM aplication but he refused. Now We know why
Next week Price can break down under 20. Cause New stop signals lighting in demands, but now we can't hold another OPEC meeting, market will see the reasonable price with 2/3 over supply.
could the market open at 15$ b on monday?
Who knows this Volatile market? but many experts predict price will go downward, for seeking another bottom.
this is just a "Happy Wish" , to cheer up the truth.
saw this also recently before.. oil inventories economic calendar in this site: https://www.investing.com/economic-calendar/eia-crude-oil-inventories-75
Cut or no cut could be short lived - $ 20 per barrel oil is not going to survive. On an earlier article by reuters a couple of hours ago, mentioned that the banks are on the move to take over shale assets from bankcrputed shale companies. Once they take it over price will go to $50-$60 range, banks needs profit and they are not a charitable companies.
exactly..
do you think in monday it will goes down more than 20$?
Monday oil will drop sharply to 20, why? 30M bpd shinked oil demand, short of storage cant covered by uncertain 10M bpd. Oil price will searching bottom again.
I guess May will be the BLACK OIL MAY.
long call options are gold. I'm loading up
I'm stuck almost 50%lost of 300barrel now but will hold
 Unfortunately, rollover is coming and spread is very high. Will stay around 4$. So that will be a double loss for me. Be carefull.
maybe this is older, but...OPEC and allies' historic oil cut hits snag as Mexico reportedly rejects deal - https://www.cnbc.com/2020/04/09/oil-jumps-ahead-of-make-or-break-opec-meeting.html
Mexico is not an opec nation lol! The deal has nithing to do wuth them
first part is correct, second pat is incorrect.OPEC and allies' historic oil cut hits snag as Mexico reportedly rejects deal - https://www.cnbc.com/2020/04/09/oil-jumps-ahead-of-make-or-break-opec-meeting.html
Again tvat us titalky wrong nobody cares what mexico does
I'm not making it up, it says it right there in that article. you can deny all you want, but you are wrong. Mexico drills enough to be the second biggest supplier to USA. Apparently OPEC cares what they do in this matter.
I'm confused. Over on CNBC there is an article that says Mexico rejected the deal at the last minute, so no deal was made and talks will continue tomorrow?
Mexico is not an opec nation so no mexico cant hold up any deal lol
no, but OPEC required countries outside of OPEC to participate in the cut in order to make a deal. USA isn't OPEC either, but they require us to cut also. OPEC and allies' historic oil cut hits snag as Mexico reportedly rejects deal - https://www.cnbc.com/2020/04/09/oil-jumps-ahead-of-make-or-break-opec-meeting.html
it wasnt OPEC meeting it was OPEC+ meeting and that includes mexico
keep it over supplied keep the price down economy will rebound faster if everyone isn't having to steal food or rent money to fill thier cars up. why does the oil industry need to make billions a quarter they can't be happy with a $100 h $300 million a quarter.
KAG
Is there any point to the 10m cut by OPEC+ if US shale increase by another 2 to 5m output? Who is going to contribute the remaining 20% drop of demand?
That’s the whole nature of this very problem.
Oversupply already.
it is working for Brent Crude how much is agreed to cut WTI?
The cut had to be 15 mbd gor 3 months
WTI to $12.55
Time for a Hummer and a long roadtrip (free gas) !!
Through my economic analysis, the price of oil will rise to $ 45 at Brent prices
what price are you waiting on monday, please write a coment?
I guess it still at the friday’s price.
market close this Friday
Lol
could oil price down vs money printer speed
it's as if they didn't cut at all XD, like seriously how do you expect Oil to rise when the cut is just a third of the demand lost, a cut should be equivalent or superior to demand lost, RIP OPEC
don't forget the by june part - lol
Bull Trap - One more Drama before pushing the prices to 12$ .... Well Played OPEC. https://www.tradingview.com/chart/USOIL/6BfGhLfe-WTI-CRUDE-BLOOD-BATH-Downtrend-continuation/
On the end cure aint going to be worse than disaasee . They will open their economies back up . And gloves and mask will be comnom sight . Get ready for 45 oil by december . But oil majors on pull back they are not going anywhere . And dont hold you breath on free oil
Cool, play short without TP as you are so confident
yes its mean the price is going to down 12 per barel there is a compition between russia and amirica thay are in dangers
Do you think it will rise to $ 30 in the next few days due to the agreement?
by june - is the key piece of info - price will fall unless something extrodinairy happens with the g20 and sat with the senators-  but I wouldn't hold my breath!
lets make a war!
Above 35
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.