This is a developing story. Check back for updates.
President Donald Trump expects Russian President Vladmir Putin and Crown Prince of Saudi Arabia Mohammed Bin Salman to announce a deal on a production cut, the president said to CNBC.
The president is expecting a cut of 10 million barrels, although the cut could be as high as 15 million barrels.
U.S. West Texas Intermediate crude surged more than 30% to trade at $25.36 per barrel, putting it on track for its best day on record. International benchmark Brent jumped 24%.
The President later said in a tweet that a production cut would be “great for the oil & gas industry!”
“It’s obviously welcome. It will be very welcomed by the industry in the short run. As long as the coronavirus continues, there’s just a substantial amount of excess capacity being generated every day,” Dallas Fed President Robert Kaplan said.
“This will be extremely helpful. It will be particularly helpful as we come out of this virus and will speed the time hopefully where the supply-demand for oil can get back into balance. But we’re a long, long way from that, and people have warned that even with a substantial move from Saudi Arabia and Russia that we’re going to spend a substantial amount of time working off a high level of oversupply,” he added.
Despite Thursday’s jump, WTI is still down more than 40% over the last month as oil prices have been hit on both the demand and supply side.
Demand has evaporated as the coronavirus outbreak has halted travel worldwide and slowed business activity, just as a price war broke out between powerhouse producers Saudi Arabia and Russia.
In March OPEC de facto leader Saudi Arabia recommended cutting production by 1.5 million barrels per day as the pandemic slowed demand. But OPEC ally Russia rejected the proposal, sparking the price war between the two countries.
As oil prices cratered — WTI is coming off its worst month and quarter in history — the U.S. sought to intervene, with president Trump speaking to his counterparts in Russia and Saudi Arabia.
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