US Brent crude oil futures are expected to firm up next week after OPEC and its allies agreed on a historic production reduction agreement on Friday. The reason why we are not too enthusiastic about a major upward breakthrough or a change in trend is because market traders have fallen into a hitch and we continue to seek destruction of demand.
Reports, and the production reduction agreement between OPEC and its main friends, including Russia, hit a hitch after Mexico refused to accept its share of the cuts after a grueling marathon meeting nine hours between the parties.
Earlier in the day, the other major players known as OPEC + agreed to reductions that would put 10 million barrels a day offline as the coronavirus pandemic undermines crude demand.
“A statement issued by OPEC following the meeting described the details of the cuts but notes the measures” agreed by all OPEC and non-OPEC oil-producing countries participating in the Declaration of Cooperation, at the except Mexico, and therefore the agreement is subject to Mexico’s consent. “
OPEC + apparently wants Mexico to reduce production by 400,000 barrels a day, but Mexico will only accept a reduction of 100,000 barrels a day for the next two months.
I expect the parties to reach a compromise over the weekend, so I am sticking to my forecast for a firm opening on Monday. The news may be enough to support prices during the…