Trump says OPEC+ will cut down the number of barrels produced from 9.7 million barrels to 20 million barrels a day

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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.

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Anthony Kiratu is the Founder of Finsolutions. He is a financial analyst with over 5 years experience in research, investment advisory, valuation and financial modelling. Anthony is a member of the Institute of Certified Investment and Financial Analysts and Institute of Certified Public Accountants of Kenya. He is passionate about development of African Capital Markets through training of investors and dissemination of information for sound financial and investment decision making process. He is also a part-time lecturer in the Certified Investment and Financial Analyst course in the subjects of International Finance, Portfolio Management, Equity Investment Analysis, and Fixed Income Securities. Email: anthony@finsolutions.co.ke Contact: +254 780216631

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