Oil spikes as Russia-Saudi Arabia head to OPEC and prep a possible historic production cut

Trump is keeping a close eye on OPEC's historic meeting

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Oil prices jumped over 4-percent building on Wednesday's gains ahead of what could be one of OPEC's most historic and impactful meetings in history.

Crude prices have been decimated in recent weeks as the fallout from the coronavirus evaporated demand and as a tit-for-tat feud between Russia and Saudi Arabia floods the market with crude.

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President Trump, who made his past disdain for OPEC known, says the two nations may come to a truce at the virtual meeting.

“You have two countries that are getting hurt very badly, Russia that is their primary source and Saudi Arabia that is definitely their primary source and it doesn’t make sense that they flooded the market, for whatever reason they did that for themselves, it was an argument that they had and I think they will straighten it out, a lot of progress has been made over the last week and it will be interesting to see what comes out of OPEC tomorrow.”

TickerSecurityLastChangeChange %
USOUNITED STATES OIL FUND L.P.25.66+0.09+0.35%

Despite the short pops in crude prices this week, U.S. prices are down 59 percent to the $26 per barrel level and Brent, the global benchmark, is off 50 percent sitting near $33 per barrel this year.

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The sharp drop has American energy companies fighting for survival. The imbalance between supply and demand slashed 44 percent from the S&P 500 energy sector’s market value, reducing it to $538.8 billion.

TickerSecurityLastChangeChange %
XOMEXXON MOBIL CORPORATION45.91+1.31+2.94%
CVXCHEVRON CORP.93.30+3.02+3.35%
HALHALLIBURTON COMPANY11.87+0.28+2.42%
CLRCONTINENTAL RESOURCES14.25+0.21+1.50%
XLEENERGY SELECT SECTOR SPDR ETF39.55+1.07+2.78%

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A production cut could be historic in size according to Phil Flynn senior market analyst at the Price Futures Group. “Look for at least 10 million and a commitment from non-OPEC of 3 million more,” said Flynn, who is also a FOX Business contributor.

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What happens if the production cut falls short or fails to materialize?

"I have a lot of options," said Trump who reiterated that American energy jobs are his primary focus when it comes to the oil industry.

U.S. Energy Secretary Dan Brouillette recently told FOX Business that he's looking into reserving up to 1 billion barrels of oil through the Strategic Petroleum Reserve at the direction of President Trump.

Before the coronavirus, America achieved the milestone of becoming energy independent for the first time ever as a net exporter of natural gas, and a net exporter of crude oil and petroleum products.

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FOX Business' Jonathan Garber contributed to this report.