Crude

A major oil production cut announcement by OPEC+ countries pushed the global oil prices up by 6% in morning trade. Riyadh along with other major oil producers have announced to cut oil production by 500,000 barrels per day. The voluntary cuts announced by OPEC+ countries will come into effect from May but the markets reacted sharply to the news on Monday. The west Texas intermediate contract jumped 5.7% to 80 dollars a barrel and Brent jumped 5.67% to 84.4 dollars.The cuts announced by OPEC+ will remain in effect till the end of the year. Earlier, OPEC+ had slashed the oil production by two million barrels per day in October. This is the single biggest oil production cut since then.

This framework would be applicable for commodities that require specialised physical storage, else they will have environmental impact, external implications and lead to significant loss

This comes in the backdrop of Brent crude hitting a 21-year low, and US oil futures slumping into negative for the first time in historyThe glut in oil overwhelmed the world’s limited storage facilities, triggering a wave of selling by oil traders in April

This is the first time since 1980s when such a call or provisional pricing has been implementedMCX is currently negotiating a price with brokers and is also consulting Sebi

Tax collections from the petroleum sector have been affected due to slowdown in economic activitiesFor India, gains from lower crude oil price will be offset by the impact of covid-19 lockdown

The price of a barrel of crude varies based on factors such as supply, demand and quality. Supply of fuel has been far above demand since the coronavirus forced billions of people to stop traveling

WTI May futures on NYMEX traded over 310% lower from their previous day’s prices at minus $40 per barrelTraders closed their May contracts ahead of Tuesday expiry to rebuild their June contracts

The fall in crude oil prices has placed major consumers such as India at an advantageThe fall in crude prices could lead to positive terms of trade for the third-largest oil importer

Austrian oil and gas producer OMV will own 15% of the refining unit and trading business, while Canada’s Eni will hold 20%The deal values Abu Dhabi National Oil Co. Refining at $19.3 billion, Adnoc said in a statement

Crude has slumped on fears the relentless expansion in American shale will undermine efforts by OPEC and its partners to balance the market