According to a tweet made on Monday by President Donald Trump, OPEC+ will cut down the number of barrels by 20 million a day. The 9.7 million barrel output cut will be doubled as a result of a deal struck by petroleum exporting countries- Russia and the U.S being inclusive.
The 20 million barrel output cut is directed to reduce the excess petroleum in the market and also fit the low demand for oil that has been caused by the spread of Covid-19. The cut down came in at a time when Russian and Saudi Arabia were in a month-long price war due to the excess crude and the low selling prices.
S&P Global Platts Analytics had earlier last week said that the global petroleum production needed to be cut down by either 15 million or 20 million barrels a day over the coming months.
Trump’s tweet honed up the oil trade on Monday with West Texas Intermediate oil delivery for May CLK20, going up by 84 cents or 3.7% and leveled to $23.60 a barrel. June Brent Crude BRNM20, +0.66 raised by 1% or 32 cents and leveled to $31.85 a barrel. The energy sector XLE showed good progress with a -0.56% on the S&P 500.
However, the likes of the S&P 500 and Dow Jones Industrial Average were going down by -1.29% and -1.61%, respectively.
Trump’s announcement is likely to deter the problems that petroleum producers are currently facing.