Following much uncertainty over the course of Thursday and Friday with OPEC, the cartel and nations including Russia have agreed to boost oil prices. It will be done with cuts by as much as 10 million barrels a day in production. There are even other countries, including the United States, that on Friday discussed their own cuts in what would be an unprecedented global pact to stabilize the market.
As per the agreement, between OPEC and partner countries, it aims to cut 10 million barrels per day until July, then an 8 million barrels per day cut through the end of the year, and 6 million a day for 16 months beginning in 2021.
Mexico had initially caused much doubt about the deal, by blocking it, however its president, Andrés Manuel López Obrador, said Friday that he had agreed with the U.S. President Donald Trump that the U.S. will compensate what Mexico cannot add to the proposed cuts.
One additional piece of uncertainty at the time of writing should be noted, on Saturday, Saudi Arabia is said to be pushing back their key decision on pricing for its crude exports, until full official commitment is agreed by global producers to a massive coordinated supply cut.
State producer Saudi Aramco is set to decide on and announce pricing for May crude exports on Sunday, according to sources familiar with the matter.
How oil prices open next week is very much dependent on whether a firm deal is agreed and signed by all OPEC and partner countries. Failure to do so ahead of oil market openings, will see much pressure to the downside and can drag CAD down with it.
Should however all be agreed, a relief rally will be expected for oil prices, but still will remain at risk of being sold, due to economic covid-19 restrictions.
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