Following several days of meetings that began last Thursday, a historic oil deal has been reached.
OPEC+ have agreed to cut production by 9.7 million barrels per day for May and June. Mexico, which was a key country that that kept an agreement delayed, will cut its output by about 100,000 barrels per day. In all, this represents about 10% of global supply.
Oil prices have been volatile since Russia's disagreement with OPEC's decision to cut oil supply in early March resulted in a price war with Saudi Arabia.
"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 U.S. shale industry, which is more vulnerable to low prices due to its higher costs," according to Reuters.
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The big Oil Deal with OPEC Plus is done. This will save hundreds of thousands of energy jobs in the United States. I would like to thank and congratulate President Putin of Russia and King Salman of Saudi Arabia. I just spoke to them from the Oval Office. Great deal for all!— Donald J. Trump (@realDonaldTrump) April 12, 2020
"In the biggest oil output cut ever, exceeding four times the cuts approves during the 2008 financial crisis, the countries will keep gradually decreasing curbs on production in place for two years until April 2022," Reuters reported.
The United States Oil Fund LP USO fell 7.26% to $4.98 on Thursday, while the Direxion Dly S&P Oil&Gs Ex&Prd Bl 3X ETF GUSH closed 0.7% higher at $24.51.
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