Why and How Crude Oil Prices Hit 7-Week High On Demand Optimism?

The crude oil price is higher in the Asian session as lower inventories and renewed demand optimism offset a stronger US Dollar.

Front-month WTi futures trading on Nymex, are higher by $0.76 to $66.46. The oil market is looking past an upcoming production increase at OPEC, choosing to instead focus on economic re-openings in Europe,for trading cues.

Given the stronger US Dollar, after a hawkish statement from Fed Chair turned Treasury Secretary Janet Yellen, the pressure was on for the American Petroleum Institute to deliver on the weekly Crude oil inventory data to save steep losses in the crude oil price. And deliver it did, reporting a much larger-than-expected drawdown in inventories of 7.688 million barrels.

Yellen sent shockwaves through risk assets earlier in the day, stating:

“It may be that interest rates will have to rise somewhat to make sure that our economy doesn’t overheat,”.

Whilst the Treasury head was quick to walk back that statement later in the day. It did little to improve the risk-off sentiment that rattled the broader market.

Charts by Yahoo Finance

The crude oil price is now trading at levels not seen since March 15th and technically may have more room to go. A move above the March 9th high of $67.98 clears the path for the crude oil price to re-visit pre covid levels.

Crude Oil Price Technical Outlook

Whilst the recent extension is looking a little stretched on the short-dated charts. The daily chart points to a growing likelihood of a run at the October 2020 high of $76.90 and an increase of +15.50% from here.

However, traders should keep a close eye on signs of a reversal in the US Dollar Index. The heavily shorted Greenback has been on a one-way ticket lower for the last 6 weeks as the world embraces the reflation trade. Any sharp snap-back for the Dollar may be enough to put a lid on Crude prices.

Failing that, we expect momentum buying through $68.00 to push the Crude oil Price to fresh 2021 highs.

An ascending trend line at $6240 (in place from the November $33.32 low) offers support. Closely followed by the 50-Day Moving average at $62.40. A break of these support levels would negate the immediately bullish outlook.

Crude Oil Daily Chart

Source

NIGERIA'S BUDGETARY BENCHMARK AS CRUDE OIL PRICE SURPASSES $65 A BARREL

Oil Prices Rally Towards $70 As Demand Outlook Improves

"Oil surpassed $65 a barrel, the highest since mid-March, as signs of strengthening demand from the U.S. to China stoked optimism that key markets ARE turning a corner in their recovery from the pandemic. West Texas Intermediate (WTI) rose $1.15 to settle at $65.01 a barrel. Brent for June settlement gained $1.29 to end the session at $68.56 a barrel. Both benchmarks posted the largest daily gain in over two weeks, settling at the highest level since March 15"- Bloomberg.

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This latest rally of crude price should give Nigeria little respite. Our budget benchmark stands at $40/barrel. Fortunately, the rise in crude oil price means our Excess Crude Account will have some inflow from now.

Agreed, OPEC production cuts affected the country badly with our daily output pegged at around 1.4 Million Barrels per day. But if our leaders can adopt a belt tightening fiscal approach and ensure transparency in their processes and every form of opacity in the system blocked, there is a silver lining in the horizon.

It looks like eyes are on global crude oil demand presently. United States a major consumer is seeing many states ease restrictions and the opportunity for summer travel, and therefore petroleum demand will increase and have a significant rebound. If United States sets the pace and reopens, the hope is other countries will surely follow and the crude oil price will keep rising.

Hopefully, we will see the end of Covid-19 anytime soon when we are all vaccinated globally against the scourge.

#justscribblingmythoughts

Femi Ogunsanwo

Oil Prices Rally Towards $70 As Demand Outlook Improves

According to report and analysis on Oilprice.com by Irina Slav, Crude oil prices got a major boost this week thanks to optimistic expectations about demand from OPEC+ and rebalancing fuel inventories in the United States.

Brent jumped to over $68 per barrel, and West Texas Intermediate neared $65 per barrel by the middle of the week and could rise even further unless headwinds appear.

Earlier in the week, OPEC+ forecast that oil demand this year would increase by 5.95 million bpd. This was an upward revision of 70,000 bpd from an earlier projection, and this fact injected optimism in traders, as did OPEC+'s decision to forego a meeting this week and keep producing at previously agreed rates.

Meanwhile, the U.S. Energy Information Administration reported on Wednesday that crude oil inventories are within the five-year average for the season—for the first time in months—and that middle distillate inventories were down by a sizeable 3.3 million barrels last week.

Middle distillates, mainly diesel, have been a headache for refiners during the pandemic as inventories reached excessive levels due to the slowdown in various activities involving freight transport. Now, businesses are returning to normal operation, according to the data, and demand for diesel is picking up.

"Between planting season and online truck deliveries, you have a nice number in the diesel," Bob Yawger, energy futures director at Mizuho, said as quoted by Reuters. "Planting season is doing wonders for the distillate market."

It seems the latest fuel demand developments in the United States were enough to eclipse earlier worry about Indian fuel demand amid a resurgence of infections there.

"There's a lot of green shoots in demand," according to Matt Sallee, portfolio manager at asset manager TortoiseEcofin, as quoted by Bloomberg. According to him, the situation in India is "clearly a headwind, but looking at what's going on in the U.S., it's a completely different story."

"The market expects a major revitalization for global oil demand from this summer onwards," Rystad Energy's head of oil markets Bjornar Tonhaugen told Bloomberg. "As vaccination campaigns progress and as lockdowns are set to soon be lifted in Europe and other recovering economies, the need for road and jet fuels will increase and the result will be felt."

Indeed, optimism appears to be on the rise. Goldman Sachs, which has been particularly bullish on oil, has stuck to its forecast that Brent could hit $80 a barrel in the second half of this year. The investment bank also said in a new note that it expected global oil demand to book its strongest rebound ever over the next six months.

At 5.2 million bpd, according to Goldman, the demand jump will be the result of accelerating vaccinations in Europe, which would, in turn, lead to greater demand for travel. This will also lead to an uptick in jet fuel demand—the worst hit segment of the fuel industry—to the tune of 1.5 million bpd, according to the investment bank.

If the rally continues as forecast, it will provide a much-needed breathing space for the Persian Gulf's oil-dependent economies, most of which need Brent to trade much higher than current prices to avoid another budget deficit. A price of $70 per barrel of the most traded benchmark may be high enough for some, such as Saudi Arabia. Still, others, notably Bahrain, need oil at $100 per barrel to make their budget ends meet.

At the same time, however, it would undermine calls for a green recovery from the pandemic. The IEA has already warned that emissions are once again on the rise after last year's lull because of lockdowns. The rebound in oil demand that banks and analysts expect appears to be proof that the transition to all-electric transport might be more challenging than some hope.

Oil prices rally as lockdowns ease & OPEC cuts pave way for recovery

Crude prices have been gaining for the fifth straight session as the production curbs agreed by OPEC and allied countries came into force and some countries started to ease coronavirus restrictions.

Futures for American oil benchmark jumped more than nine percent on Tuesday, extending their earlier gains. West Texas Intermediate (WTI) for June delivery was trading at over $22 a barrel as of 07:30 GMT, more than doubling from last week’s intraday lows.

Meanwhile, international benchmark Brent for July delivery gained more than six percent to $29.02 after climbing in the previous session.

Both WTI and Brent have been advancing for several consecutive days, with the US crude starting its winning streak on April 29 and the latter just one day earlier.

The positive sentiment in the energy market comes as the members of the Organization of the Petroleum Exporting Countries (OPEC) as well as allied oil producers started cutting oil output as a key oil agreement came into force on May 1. The accord is set to wipe out nearly 10 million barrels per day from the overflowed market, while some countries beyond the agreement have also curbed production to help oil prices rebound.

At the same time, some countries in Europe and Asia, as well as some US states, are slowly lifting some of the coronavirus-related restrictions, giving hope that the demand-supply gap may become smaller. However, some gloomy forecasts indicate that the coronavirus crisis crushed global demand for the commodity as much as much as 30 percent last month. 

With no cuts in force, some countries even boosted their exports of crude in April, worsening the supply glut and fueling fears that the world is running out of space to store oil.

Source

Oil prices grow as historic OPEC+ production cut deal comes into effect

The prices for Brent crude and WTI have increased after the hard-fought OPEC+ deal took effect on Friday. According to RT confirmation report.

With Coronavirus on the rampage globally, the oil market succumbed to a dramatic crash last month due to global glut and fears of a lack of storage capacity.

The price for Brent crude oil (ICE) has grown by 1.77 percent, reaching nearly $27 per barrel. The price for WTI (Nymex), meanwhile, currently stands at $19.35 per barrel, which is a 2.7 percent increase.

On April 12, the members of OPEC and other oil-producing countries, including Russia and Mexico, agreed to cut production by 9.7 million barrels per day for May and June, marking the biggest oil production cut in history.

The hard-fought deal came after a month of a price war between Russia and Saudi Arabia, which had previously failed to agree on a joint reduction of output.

The oil markets have been suffering from a historic glut after many countries went into lockdown due to the ongoing Covid-19 pandemic. The steep drop in demand sparked fears that oil storages would run out of space. 

This led to a dramatic price crash last month, during which Brent crude had plummeted to its lowest level since 1999. The price for WTI had been driven to a negative for the first time in history. Both Brent and WTI have since then been slowly recovering.

US threatens to withdraw military from Saudi Arabia over oil crisis: report

The United States is putting pressure on Kingdom of Saudi Arabia to cut its oil production as the  U.S. President Donald Trump threatened the Arab country, in the absence of a response, to withdraw military support.

According to the Reuters News Agency, citing four sources, the agency said that Trump called Saudi Crown Prince Mohammed bin Salman on April 2 and told him that if OPEC countries did not start cutting oil production, he would be unable to stop U.S. lawmakers from passing a law to withdraw U.S. forces from the Gulf Kingdom.

The agency said that this threat to end a 75-year strategic alliance represented a focal point in the American pressure campaign that led to a prominent global deal to reduce oil supplies, in conjunction with the collapse of demand for it in light of the spread of coronavirus, and was considered a diplomatic victory for the White House.

According to the agency, Trump sent his message to the Crown Prince ten days before the announcement of production cuts, and MBS was surprised by the threat that he ordered his aides to leave the room so that he could continue the discussion separately.

A senior U.S. official told the agency that the administration informed Saudi leaders that “without production cuts,” there would be no way to prevent the U.S. Congress from imposing restrictions that might lead to the withdrawal of US forces. ”

It is reported that Trump, in his response to the agency’s question whether he had told the Crown Prince that the United States may withdraw its forces from Saudi Arabia, said that he “should not have told him.”

Source

Venezuelan oil price falls to $9.90, lowest level in 20 years

Caracas, (AFP): The price of Venezuelan oil fell to its lowest level in more than two decades to just $9.90 a barrel, the oil ministry said on Friday.

The ministry said the price between Monday and Friday was 70.62 Chinese yuan, a level that has not been seen since 1998 when it was $9.28.

Since 2017, the government of Venezuela President Nicolas Maduro has announced its oil prices in yuan rather than dollars in protest at US sanctions. AFP

President Trump’s tough talk on Iran ‘boosts’ oil prices – but demand & storage issues persist

Traders credited US President Donald Trump’s threats to sink Iranian patrol boats in the Persian Gulf for the sharp increase in oil futures, just days after lack of storage and low demand drove the US benchmark WTI below zero.

June contracts for West Texas Intermediate crude went for $16.87 a barrel on the New York Mercantile Exchange on Thursday, rising 19 percent for the second straight day. Brent crude, the international benchmark, was also up by almost five percent to $21.33 a barrel. This comes after May WTI contracts traded for -$37.63 a barrel on Monday.

International analysts and oil brokers alike attributed the rise in part to Trump’s aggressive rhetoric towards Tehran.

“Threats of war have always been an important factor in increasing the oil prices,” Hamidreza Azizi, Visiting Fellow at the German Institute for International and Security Affairs (SWP) has told RT earlier.

Trump’s revelation that he had ordered the US Navy to sink Iranian patrol boats if threatened “boosted the possibility of renewed tension in the Middle East, a major oil producing region, which traders always translate to reductions in the region’s production and exports if things escalate,” said Bjornar Tonhaugen, head of oil markets at Rystad Energy, in a daily research note quoted by MarketWatch.

However, most were convinced that the threat of actual war between the US and Iran remained relatively low.

While the price of WTI futures was driven mostly by a glut of oil in warehouses and depressed demand due to coronavirus lockdowns across the US, the global index had taken a beating from a price war initiated by Saudi Arabia ostensibly against Russia, with US shale producers catching the brunt of the fallout.

The war ended in a tentative truce last week, as OPEC, Russia and other oil producers agreed on cutting production by 10 million barrels a day, starting in May. With no end in sight to Covid-19 shutdowns from the US and Europe to India, however, the demand is likely to stay low.

“The storm for oil isn’t over but at least for the time being it is less volatile than the headline-grabbing moves of the last few days,” notes Carlo Alberto De Casa, chief analyst at ActivTrades, but added that in the long-term he sees the need for further production cuts from the Organization of Petroleum Exporting Countries (OPEC) and others.

Source

WTI oil price falls below zero linked to peculiarities of trading — experts

The price for West Texas Intermediate (WTI) oil futures with delivery in May crashed below zero on Monday, but, according to experts, this is a short-term situation, caused by peculiarities of stock exchange trading.

As of 21:50 Moscow time on Monday, WTI oil futures for May 2020 traded at below zero at London's ICE stock exchange, reaching -$40.32 per barrel at their lowest. WTI futures for June dropped to $20.85 per barrel (-16.7%), Brent - to $25.86 per barrel (-7.9%).

"This is a classical 'corner' - a stock exchange scenario when you urgently need to liquidate an adverse position, which you cannot deliver, and you have to liquidate it at any price. You should either get a contract or get a delivery, but a delivery is impossible, because the storage is already full, so you must liquidate it," analyst of the Russian investment group Finam Alexei Kalachev told TASS, adding that currently some market players generate enormous profit while others sustain even greater losses.

WTI oil is extracted in Texas and is used mainly for producing gasoline. It usually trades lower than the Brent crude, which serves as a benchmark for the entire oil market, including Russia’s Urals. This is related to the fact that, unlike Brent, WTI futures are directly linked with physical deliveries.

Experts said that the sharp decline in prices is related to the fact that trading in May WTI futures will end on April 21. At the same time, they add that Monday’s plunge to historic lows is also caused by the unfavorable situation on the market.
Brent and Urals

Analysts believe that the fall in Brent oil prices to below $10 per barrel, similar to the plunge of WTI futures for delivery in May, is possible, but it will not last long.

"The situation on the physical market remains very difficult, especially as long as the OPEC+ deal has not yet entered force, therefore, a short period of Brent and Urals falling below $10 cannot be ruled out," Senior Director at Fitch Ratings Dmitry Marinchenko told TASS.

Meanwhile, Raiffeisenbank’s analyst Andrei Polishchuk says that although it’s hard to make any predictions, Brent oil prices may repeat the WTI scenario.

"The price might also fall to zero, is it is a short-term element of market speculation," he said, adding that under the current circumstances, the price leaps on the oil market are caused not only by the looming expiration, but also by the general situation on the oil market.

Finam analyst Alexei Kalachev, however, has a different opinion. Although he admits that a scenario of this kind is generally possible for Brent oil, but sees no reason for it to happen at the moment.

"This is extremely unlikely," he said.

Source

Telephone Conversation: Moscow, Riyadh confident that OPEC+ countries will fulfill their commitments — ministry

Russia and Saudi Arabia are firmly committed to fulfilling the OPEC+ deal on cutting oil output, the Russian Energy Ministry said on Thursday after a telephone conversation between Russian Energy Minister Alexander Novak and Saudi Arabia's Energy Minister Abdulaziz bin Salman Al Saud.

"Both countries are firmly committed to fulfilling the coordinated target cuts, they will continue to closely monitor the oil market and, if needed, they are ready to take any necessary measures together with OPEC+ and other producers. Russia and Saudi Arabia are also confident that their partners in OPEC+ and other producers will fulfill the undertaken commitments," the ministry said.

The ministry added that after the talks, both sides noted that Russia and Saudi Arabia have done a lot for reaching a historical agreement with OPEC+ countries and several other producers on the stabilization of the oil market.

Source

Putin says OPEC+ deal should be complied with by all participants

It is important that the new OPEC+ oil production limiting deal is complied with by all its participants, Russian President Vladimir Putin said on Wednesday at the meeting with Cabinet members.

"It is important that everyone executes the agreements reached. There should be an ongoing contact with all the colleagues, mainly with leading players," Putin noted.

The president extended an appreciation to Russian Energy Minister Alexander Novak and his colleagues for the work completed in this sphere. "I saw how you worked in this area. This is your common result," the head of state added.

OPEC+ participants managed to finalize the oil production limiting deal on April 12. It stipulates the oil production cut by 9.7 mln barrels per day in total in May-June 2020, by 7.7 mln barrels per day in July-December 2020 within the alliance framework, and by 5.8 mln barrels daily in January 2021-end of April 2022. 

Russia will lower its daily oil production by 2.5 mln barrels daily from the base level of 11 mln barrels. Deal parameters can be revised in December 2021.

Source

US President Trump says OPEC+ planning to cut production by 20 million barrels per day

US stocks open lower ahead of key earnings, economic data, Dow and S&P 500 both slip 0.8%

United States President Donald Trump on Monday via Twitter the  historic weekend oil cut deal struck between OPEC and some of the biggest oil producers on the planet could be more substantial than what has been announced.

Trump’s tweet suggests that a global output cut by 9.7 million barrels a day struck by the Organization of the Petroleum Exporting Countries, Russia and the U.S. could be doubled.

That 20 million figure would be closer to what commodity experts say is required to sop up excess crude swirling in the market and address a shock to demand caused by the COVID-19 pandemic. Trump said.

The weekend deal ends a month-long price war between Saudi Arabia and Russia that flooded the world with unneeded crude and amplified a meltdown in oil prices, but, according to critics, would only go partway toward stabilizing oil prices, which have seen a double-whammy from the Saudi-Russian price war and the pandemic.

S&P Global Platts Analytics said last week that the major oil producers needed to curtail crude production by 15 million or 20 million barrels a day over the coming months.


Oil trading on Monday, which has been choppy in the wake of the pack, picked up some steam after Trump’s tweet , with West Texas Intermediate crude for May delivery CLK20, +1.09% up 84 cents, or 3.7%, at $23.60 a barrel. June Brent crude BRNM20, +2.03%, the global benchmark, was up 32 cents, or 1%, at $31.85 a barrel.

However, the Dow Jones Industrial Average DJIA, -1.88% and the S&P 500 index SPX, -1.61% were slumping in the first trading day of U.S. trading after the Easter holiday, with European markets remaining closed on Easter Monday.

The energy sector XLE, -0.36%, however, was the lone area in positive territory early Monday on the S&P 500.

Trump sough to make the case that a more substantial deal could avert “disaster” for battered oil and gas producers and allow companies in the oil patch to rebound “far faster than currently anticipated.”

COVID-19: OPEC+ approves historic oil deal amid coronavirus pandemic

OPEC, Russia and other oil-producing nations agreed on Sunday to cut output by a record amount, representing around 10 percent of global supply, to support oil prices amid the coronavirus pandemic.

The group, known as OPEC+, agreed to reduce output by 9.7 million barrels per day (bpd) for May-June, after four days of marathon talks and following pressure from US President Donald Trump to arrest the price decline.

Two OPEC sources told Reuters that the deal had been sealed in a video conference on Sunday, and the agreement was confirmed in a statement from by Kazakhstan's energy ministry.

In the biggest oil output cut ever, the countries will keep gradually decreasing curbs on production in place for two years until April 2022.

Measures to slow the spread of the coronavirus have destroyed demand for fuel and driven down oil prices, straining budgets of oil producers and hammering the US shale industry, which is more vulnerable to low prices due to its higher costs.

Trump had threatened OPEC leader Saudi Arabia with oil tariffs and other measures if it did not fix the market's oversupply problem as low prices have put the US oil industry, the world's largest, in severe distress.

OPEC+ has said it wanted producers outside the group, such as the United States, Canada, Brazil and Norway, to cut a further 5 percent or five million bpd.

Canada and Norway had signalled willingness to cut and the United States, where legislation makes it hard to act in tandem with cartels such as OPEC, said its output would fall steeply by itself this year due to low prices.

The signing of the OPEC+ deal had been delayed since Thursday, however, after Mexico baulked at the production cuts it was asked to make.

Mexican President Andres Manuel Lopez Obrador said on Friday that Trump had offered to make extra US cuts on his behalf, an unusual offer by Trump who has long railed against OPEC.

Trump said Washington would help Mexico by picking up "some of the slack" and being reimbursed later. He did not say how this would work.

Global oil demand is estimated to have fallen by a third as more than three billion people are locked down in their homes due to the coronavirus outbreak.

A 15 percent cut in supply might not be enough to arrest the price decline, banks Goldman Sachs and UBS predicted last week, saying Brent prices would fall back to $20 per barrel from $32 at the moment and $70 at the start of the year.

(REUTERS NEWS AGENCY)

Oil price after OPEC+ deal to stay within $30-40 per barrel - Lukoil vice-president

Lukoil hails the results of the oil production cuts deal between OPEC+ and a number of other nations, the company’s vice -president and co-owner, Leonid Fedun, said on Saturday.

"Should the deal be not reached, we will have to mothball our well all the same if the prices dropped to $15-20 per barrel, actually having no normal money flow either to the sector or to the budget, with the export duty being zeroed. Now we can expect that oil prices will stay in the range from $30 to $40 US," he said in an interview with RBC.

According to Fedun, thanks to the deal Russia will receive an extra of $70-80 mln dollars in revenues as day. Moreover, the deal has stopped the price war with Saudi Arabia which has been aggressively undercutting prices offering its oil to Europe with a discount of ten US dollars per barrel. "Futures contracts we see on screens are one thing and real supplies are quite another thing. Actually, they have begun to squeeze Russian oil out of European manufacturers [of petrochemicals], filling their storage facilities. And the fact that Saudi Arabia will stop undercutting prices now, as will the United Arab Emirates, Kuwait and Iraq, is obviously an advantage for Russia," he said.

However he admitted that the deal with OPEC had negative aspects too. "I would cite an example of the Treaty of Brest-Litovsk when due to various reasons the Bolsheviks had to cut a humiliating deal with Germany in 1918," Fedun noted.

He said he anticipated that by the second half of the year oil prices would be nearing $40 per barrel and the market would reach a balance not earlier than the end of 1022. "It is a realistic forecast if coronavirus rolls back and demand restores. The deferred demand is quite high and I think reserves will stop augmenting by June to begin to reduce. But final equilibration of demand and supply can be expected not earlier than the end of 2022," he added.

TASS

OPEC+ : Timeframe of new agreement on oil output may be reconsidered — Novak

Russian Energy Minister Alexander Novak on Friday said the OPEC+ may increase or decrease the timeframe of the new two-year agreement on cutting oil output. Tass reported.

 Novak said  this Rossiya-24 television channel on Friday. "We will have an opportunity to extend this timeframe. If the situation on the market improves faster, we will be able to decide to cease activities on restoring the market in shorter time," Novak said.

The OPEC+ countries discussed three options for the new agreement. "For one year, for three or for four years. We agreed that the timeframe is two years. This is the timeframe that is the most effective for the market, in order to send a signal that the countries are serious about taking measures to restore the situation on the market, to restore the balance of demand and supply," he added.

"Our companies are ready [to cut production], and we are in contact with the top executives of our oil companies," he continued. Novak added that the ministry though the companies would be able to take technological measures to attain the product cuts level required from Russia.

The minister stated that non-OPEC countries also agreed to cut oil output. "Today in the G20 framework, there were 20 countries that also participated, and many talked about measures that need to be taken in order to improve the situation on the market," Novak said.

"For example, Canada said that they will cut oil output by around 1 million barrels per day. The United States, Norway, Argentina and others said they would cut output as well. We think that in addition to 10 million barrels per day that OPEC+ countries agreed to cut oil output by, other countries that are not OPEC+ members will cut output by an additional 5 million barrels per day together," he added.

The OPEC+ nations early on Friday agreed to cut oil production by ten million barrels a day in May-June. Production cuts will be continued up to May 2022 but is smaller amounts.

Under the OPEC+ plan, each of the 23 member nations is to reduce output by 23% on that in October 2018. The exceptions are Russia and Saudi Arabia that are to equally cut production from 11 to 8.5 million barrels a day. The deal was not finally sealed because of Mexico’s position as it refused to cut production by 400,000 barrels a day, as it was supposed, and agreed to do it by only 100,000 barrels a day. Later on, according to Mexico’s president, the country agreed with OPEC+ and the United States that its daily production cuts would stand at 100,000 barrels a day while the United States would cut an extra of 250,000 barrels a day instead of it.

Online talks between G20 energy ministers continued through Friday. According to Novak, aggregate production cuts in the OPEC+ and some of their G20 partner nations could amount to 15 million barrels a day.

OPEC+ to continue negotiations for reaching consensus with Mexico

Mexico ready to cut oil production by 100,000 barrels for next two months — minister

The OPEC+ agreement to reduce oil production by 10 million barrels per day will be preserved despite Mexico’s withdrawal from the deal, sources told TASS on Friday.

"The deal is preserved, but the agreement is now conditional. I think we will try to win Mexico’s consent during the G20 talks on Friday," one of the sources said.

Another source confirmed this information, adding that the OPEC+ talks still continue.

A source taking part in the ongoing negotiations told reporters earlier on Friday that Mexican Energy Minister Rocio Nahle disagreed to the proposed OPEC+ oil cuts and left the video conversation, "enraged."

TASS sources also said the negotiations continued even after the Nahle withdrew from the conversation.

The OPEC+ talks in the format of a video conference began at 17:00 Moscow time on April 9 and continued overnight. TASS sources said that the participants agreed to cut their combined oil production by 10 barrels per day in May-June. However, during the discussion on each country’s quotas, Mexico rejected the proposed reduction of 400,000 barrels per day from the figures of October 2018.

One of the sources said Mexico disagreed with the basic level for the reduction. During the talks, Nahle argued that her country’s oil output was higher recently, and, therefore, the country should reduce less.

In line with the OPEC+ plan, Mexico was supposed to reduce its oil production from the basic figure of 1.75 million barrels per day. However, according to the International Energy Agency, the country produced 1.95 million barrels per day in the fourth quarter of 2019.

According to a statement issued after the talks, OPEC+ ministers expect to reach consensus with Mexico, which disagreed with proposed oil production cuts.

"The above agreement is conditional on the consent of Mexico, including volunteered adjustment in the attached tables," the statement says.

The secretariat also calls upon other oil producing nations to make their contribution into stabilizing the oil market.

"Participating Countries will meet on 10 June 2020 via webinar, to determine further actions, as needed to balance the market," the document says.

A discussion about terms proposed by Mexico is scheduled to take place within the framework of G20 talks, scheduled for 15:00 Moscow time on Friday, April 10.

After leaving the talks on Friday, Energy Minister Rocio Nahle said in a Twitter post that Mexico had offered reduce its oil production by 100,000 barrels per day for the next two months as part of the OPEC+ deal.

According to TASS sources, during Thursday’s talks OPEC+ nations suggested that Mexico reduce its oil production by 400,000 barrels per day.

Early on Friday, during the web conference of OPEC+ ministers, Nahle disagreed with the proposed cuts and

COVID-19: OPEC+ countries discussing oil production cuts from May to end of July, say sources

According to Russia's news agency TASS, citing two sources in OPEC on Tuesday, OPEC+ countries are discussing production cuts within the new deal framework from May to the end of July 2020 at the least.

A high-ranking source in the organization hinted that the deal may start from May and lasted for at least three months.

  "Three months. I believe the deal can be made from May because April deliveries have already been scheduled," it said. 

No clear deadline has been set so far "but it will be definitely longer than until June," another source added.

The OPEC+ oil production reduction deal ended on March 31, 2020. The reason was disagreements between Russia and Saudi Arabia on terms of its extension after March.  The withdrawal from the agreement became the cause for production growth in OPEC countries, coupled with the unprecedented demand drop because of the coronavirus pandemic. 

The oil prices fell to $22 per barrel due to a combination of these factors for the first time in twenty years. 

The partners decided to resume consultations and involve other producers from G20 countries, especially US whivh is the largest oil producer in the joint actions. 

Negotiations will be held on April 9 in a videoconference format.

Russia confirms participation in OPEC+ meeting on April 9

Russia’s Energy Ministry has received an invitation from OPEC to participate in the OPEC+ ministerial meeting, which will be held on April 9 as a videoconference, a representative of the ministry told TASS, adding that Russia confirms its participation.

"Yes, we have received an invitation. We confirm (participation)," he said asked whether Russia would take part in the meeting on April 9 planned to focus on a discussion of measures to stabilize the oil market by oil-producing nations.

The OPEC+ agreement on crude production cuts expired on March 31, 2020. Russia and Saudi Arabia failed to come to an agreement on the terms of its extension after March, which triggered an increase in production in OPEC states. Concurrently, the demand posted an unprecedented plunge due to the coronavirus pandemic. Those factors combined pushed the oil price down to $22 per barrel for the first time in two decades. By the end of March, the partners had decided to resume consultations and involve other producers from G20 counties in joint efforts.

TASS

OPEC meeting on Monday will probably be postponed a few days: source

OPEC, allies to seek response to coronavirus pandemic

OPEC and its allies are due to discuss oil production cuts next week following US President Donald Trump's claim that leading producers Russia and Saudi Arabia will slash output to boost tumbling prices.

The meeting was originally expected to be held via video conference on Monday, but now looks likely to be pushed back to “take place later in the week,” said a source close to OPEC, who asked not to be named.

On Thursday, kingpin exporter Saudi Arabia called for an urgent meeting of OPEC and other countries to “stabilise the oil market” following a phone call between Trump and Saudi Crown Prince and de facto leader Mohammed bin Salman.

Oil prices have tumbled since the beginning of the year due the fallout from the coronavirus pandemic — which has weighed heavily on economies and demand — and a price war between OPEC kingpin Saudi Arabia and Russia, the key player in OPEC+.

The two countries failed to agree further output cuts at a meeting at the Vienna-based Organization of the Petroleum Exporting Countries (OPEC) last month, leading Riyadh to open the oil taps to flood the market.

OPEC+ member Azerbaijan's Energy Ministry said in a press release that next week's meeting would aim to discuss the adoption of a “new declaration of cooperation”.

Russian President Vladimir Putin said Friday that Moscow was prepared to discuss “a reduction in the volume of about 10 million barrels a day, a little less, maybe a little more.”

“I believe that it is necessary to combine efforts in order to balance the market and reduce production,” Putin said.

According to a Russian source cited by the TASS news agency Friday, US officials have been invited to take part in the meeting.

– 'Poker game' –

Trump surprised investors on Thursday by tweeting: “I expect & hope” Riyadh and Moscow will be cutting back “approximately 10 Million Barrels, and maybe substantially more”.

“Could be as high as 15 Million Barrels,” he added in a subsequent post.

Oil prices — which hit 18-year lows earlier this week — rallied sharply following Trump's statements, marking a record rise in a day's trading on Thursday.

On Friday, Brent stood at $34.11, up 14 percent, and WTI at $28.34, up 12 percent.

However, a deal “at this stage seems more like speculation than something likely to happen quickly,” warned Carlo Alberto De Casa of ActivTrades.

Rystad Energy analyst Per Magnus Nysveen, who described next week's meeting as a “poker game”, also warned that “the sticking point is how much each producer is willing to cut”.

In February, Russia put out some 10.7 mbd, while Saudi Arabia produced 9.8 mbd, according to the last monthly OPEC report.

The US is the world's biggest producer with 13 mbd but its shale oil has a high production cost and is no longer profitable at current prices.

The figures cited for the possible output reduction would represent “a massive 10 percent cut to global output,” calculated LCG analyst Jasper Lawler.

“The question is how much has demand dropped because the coronavirus lockdown?” he said, referring to strict containment measures put in place around the world to stem the coronavirus pandemic.

“Ten million barrels is probably still not enough,” he added.

Josh Mahony of IG warned that with the chances for a deal “fairly low”, the market was “setting itself up for painful disappointment, which could see the gains of the past 48 hours quickly erased.”

AFP/APP

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COVID-19: Russia ready to cooperate on cutting oil production - Putin

Russian Putin

Moscow (AFP) - Russia is ready to cooperate with Saudi Arabia and the United States to cut oil production, President Vladimir Putin said Friday.

Putin said Russia was willing to make agreements within the framework of the OPEC+ group and that "we are ready for cooperation with the United States of America on this issue," according to a statement published by the Kremlin.

"I believe that it is necessary to combine efforts in order to balance the market and reduce production."

Oil prices have tumbled in recent weeks in the face of a drop in demand and global economic uncertainty over the new coronavirus pandemic.

Last month, OPEC and its allies failed to reach a deal on oil production cuts after OPEC+ leader Moscow refused to tighten supply to counter the effects of the coronavirus outbreak.

Speaking with Energy Minister Alexander Novak via conference call, Putin said Russia was prepared to discuss "a reduction in the volume of about 10 million barrels a day, a little less, maybe a little more."

He said Russia was in close contact with partners Saudi Arabia and that he recently spoke to US President Donald Trump.

The Kremlin on Thursday denied Putin spoke to Saudi Crown Prince Mohammed bin Salman after Trump made the claim on Twitter, and oil prices rocketed.

Putin's comments come as the OPEC group of oil producers led by Saudi Arabia plan to meet Monday via videoconference, according to a source close to the organisation.

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Contacts with oil producers can be promptly agreed upon — Kremlin

Putin

Russian President Vladimir Putin has not planned meetings with Russian oil producers and leaders of Saudi Arabia but such contacts can be promptly agreed upon if required, Presidential Press Secretary Dmitry Peskov told reporters on Monday.

"Not planned so far," Peskov said, answering the question whether the Russian leader plans a new meeting with chief executives of Russian energy companies. No contacts with the king or the crown prince of Saudi Arabia are planned either, he noted.

"No, no such plans for the time being," the press secretary said. "Contacts are currently agreed upon fairly quickly and can appear in the schedule if needed," Peskov added.

The situation on financial markets was predictable, Peskov noted. "There were expectations and forecasts that the period of lower oil and energy prices would come," he said.

"We are keeping a close eye on trends in this area. You know that our producers regularly communicate with the Ministry of Energy; they are contacting on an ongoing basis. All the required work is underway in this case," the press secretary added.

OPEC+ agreement participants failed to decide on further oil production cuts in view of the falling demand due to the coronavirus spread during talks on March 6. All the limitations of oil production will be lifted from April 1, 2020. Moscow has already stated the possibility of quickly scaling production up by 200-300 thousand barrels daily and by 500,000 barrels per day over time.


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