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As the world continues to grapple with the fallout from the coronavirus crisis, some of the largest oil producers in the world are coming together with the potential of a joint global oil output cut. 

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Oil prices surged by the most on record in percentage terms on Thursday, jumping by 25 percent. Prices were up again on Friday during early trading. The jolt came from a tweet from President Trump regarding a supposed 10-15 mb/d cut from Russia and Saudi Arabia. Riyadh did indeed call for an emergency OPEC meeting, but the tweet raised a ton of questions.

Russia denies, Saudi takes measured tone. Russia said that no conversations occurred and that it had not agreed to anything. Saudi Arabia called for a meeting but said that action on its part would depend on other countries participating. One OPEC official said the tweet was "Trump talking before his brain engages," according to the FT.

Diplomacy picks up pace. While the numbers in Trump's tweet appeared unrealistic, there is some degree of interest from all sides to collective production cuts. It's not clear that the U.S. would offer anything - Reuters reported that the U.S. government would not ask domestic oil producers to cut output. In addition, Russia has shown a reluctance to cut output, eyeing a decline in U.S. shale. Indeed, oil prices at $25, or $20, or possibly even lower would impose production cuts even without any formal governmental arrangement. Still, a new round of negotiations could take place, possibly with U.S. involvement. Related: U.S. Shale Ready To Fire Back In The Oil Price War

A 10 mb/d cut after all? By early Friday, there seemed to be some momentum on negotiations. Bloomberg reported that Russia was open to a global pact. At the time of this writing, OPEC was rumored to be exploring a scenario in which Saudi cuts by 3 mb/d, Russia cuts by 1.5 mb/d, non-Saudi Gulf States cut by 1.5 mb/d, and the U.S., Canada and Brazil cut by nearly 2 mb/d.

Alberta open to cuts. "If we see an effort at a global reduction in production, we would be open to further measures on our part," Alberta's Premier Jason Kenney said. Alberta has been suffering from sub-$5 oil.

Brent physical trades at $10 discount. Physical Brent barrels are trading at a $10-per-barrel discount to Brent futures, a sign that the underlying physical market is deeply oversupplied even as traders demonstrate optimism about the potential for a production cut.

Whiting Petroleum goes bankrupt, dishes out executive pay. Whiting Petroleum (NYSE: WLL) became the first major victim of the unfolding collapse in oil prices, filing for bankruptcy this week. The board approved roughly $14.6 million in executive bonuses just days before the Chapter 11 filing.

Chevron cancels contract in Venezuela. Chevron's (NYSE: CVX) joint ventures with PDVSA cancelled service contracts in recent weeks, according to Reuters. A drop in maintenance could lead to production declines. 

China's refiners increase processing. China's refineries have started to increase processing, with runs set to increase by 755,000 bpd in April, a 10 percent month-on-month increase.

Schlumberger to cut workforce. Schlumberger (NYSE: SLB) said that it would implement widespread salary and job cuts.

BP slashes spending 20 percent. BP (NYSE: BP) said it would cut spending by 20 percent, including a 50 percent cut in U.S. shale spending. "This may be the most brutal environment for oil and gas businesses in decades," CEO Bernard Looney said in a statement.

Gas inventories rise. Warmer-than-average temperatures along with demand destruction have led to a spike in natural gas inventories in Europe. "There's a chance we will see a collapse in prices in the U.S.," Francisco Blanch, head of global commodities and derivatives research at Bank of America, told Bloomberg. "We are going to be weak on the demand destruction related to the virus, but the real issue is that we had a very warm winter and we are coming out with extreme high inventories." Related: Oil Price Crash Opens A Window Of Opportunity For Renewables

U.S. DOE to allow SPR storage. After a plan to buy oil for the U.S. SPR fell through, the Department of Energy is going to open up the SPR for leased storage. There is roughly 77 million barrels of capacity available.

Extraction Oil cuts spending 42 percent. Extraction Oil & Gas, a Denver-based driller, cut spending by 42 percent.

Mnuchin says oil industry won't get direct loans. In response to pressure from Sen. Lisa Murkowski (R-AK), Sec. of Treasury Steven Mnuchin said that the oil industry would be eligible for loans from the new program created by the stimulus package, just like every other business, but that they wouldn't receive direct loans from the government.

Trump considers import tariffs on oil. The White House is reportedly considering placing tariffs on imported oil as a way of throwing aid to U.S. oil producers. The plan has met strenuous opposition from refiners and even the API, an oil lobby group that some say reflects the interests of the oil majors. A group of oil executives are set to meet with President Trump on Friday.

Shale drillers hire Rick Perry. A group of shale drillers have tapped former DOE Secretary Rick Perry to pressure the Trump administration on protectionist measures, such as tariffs on imported oil.

European oil majors issue $12 billion bonds. Royal Dutch Shell (NYSE: RDS.A), Total (NYSE: TOT) and Equinor (NYSE: EQNR) are selling a combined $12 billion in bonds to cover costs and maintain dividends.

By Josh Owens for Oilprice.com

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Josh Owens

Josh Owens is the Content Director at Oilprice.com. An International Relations and Politics graduate from the University of Edinburgh, Josh specialized in Middle East and… More