Still no OPEC+ deal but expect higher fake cutsMexico has not budged but we are asked to believe that an announcement of a 10 million barrels per day cut for two months starting in May followed by 6-8 million barrels per day cut for months afterwards is delayed because of a 300,000 barrels per day disagreement with Mexico. This small Mexican standoff is being blamed. I’m sure it goes deeper than that and it has to do with disunity.
So I predict OPEC+ will do something to save face and distract from the fact that all of this is impotent and irrelevant. I predict they will “spectacularly “ announce they have secured higher levels of cuts when including certain G20 nations such as the US. My guess is the total cuts they announce will be around 15 million barrels per day. They won’t say this but essentially they will be acknowledging and taking credit for cuts the marketplace will demand.
However, the marketplace will demand much higher cuts in the order of 30 million barrels per day that have been needed for the last several weeks, not starting in May. The marketplace needs cuts certainly over 10 million barrels per day even after global restrictions on commerce start to slowly ease, whenever that starts. And the marketplace will get what it wants and it will be painful for energy companies.
So any news of higher cuts are all smoke and mirrors. Higher oil prices that may temporary occur from an announcement will be just that, temporary. And ironically higher prices now will better ensure all grades of oil eventually get into the teens and stay there longer. Global oil storage capacity will essentially be breached within the next two months. Extreme pain is on the distant horizon. Protect your hard-earned money.
JMHO. GLTA.