Oil prices are jumping on President Trump’s news that the Saudis and Russians are ending their feud and will cut oil production by 10 million barrels. Oil rallied over 30% after Saudi Arabia issued a statement calling for an urgent OPEC+ meeting and that they want to restore balance to the oil market.
Oil pulled back from the highs after Kremlin spokesperson Peskov said that President Putin has not spoken to the Crown Prince.
All the fine details seem to still be up in the air so President Trump’s tweet might have been premature. Oil is a tangible asset and with global storage tanks nearing capacity, production cuts were going to happen regardless of an agreement being reached by the the top three energy oil producers. It should also be expected that the US will contribute to production, even though no details were mentioned.
An oil production cut agreement is likely to be reached quickly, but that might only provide a limited rally as demand devastation will not see any signs of relief for at least a couple more months. WTI crude will likely see sellers defend the $30 a barrel.
FX
The Canadian dollar, Norwegian krone and Russian ruble are all rallying strongly following the sharp rise in oil prices. These oil-export driven economies will breathe a sigh of relief that a key bottom has been made for oil prices.