Mexico Holds Up OPEC+ Production Cut Agreement
April 10th, 2020
Just a reminder that the energy markets are CLOSED today for Good Friday and there are no forward contracts available.
Well all day yesterday everyone heard about the OPEC+ cut. 10 million, 15 million maybe even 20 million all the headlines read. At the very last minute late in the night the meeting ended missing one signature. Mexico walked out at the very end which is a bit surprising since they really have the smallest stake in the whole deal as it has been widely reported that Mexico has already put on their hedges for this year. Now this is a very fluid situation as reports this morning are already saying progress is being made so I am not sure if we get a deal or not, but my gut tells me by Sunday night when the energy markets reopen there will be an agreement in place. The OPEC+ group technically needs a unanimous decision. As I have said the energy markets are closed today for Good Friday, so you have three days to banter this subject around and create news headlines with no market reaction. This will give OPEC+ the weekend to talk about strict compliance to quotas and that the they are committed to help stabilize the oil market and all should be well come Sunday night when markets reopen.
Energy ministers from the Group of 20 major economies will convene for their own extraordinary video meeting today( Friday).
Demand for various refined and distilled products is down across the board, with gasoline demand estimated to be down as much as 60%.
An OPEC production cut is needed and will help the energy markets, but demand destruction is big, and the overall impact is still unknow because we have no idea how long these lockdowns last or how we transition out of them.