News Article

Mexican Crude Basket Jumps Over 50 Percent in Value

By Peter Appleby | Fri, 04/03/2020 - 13:28

The Mexican Crude Basket closed with a stunning 51.27 percent increase in its price yesterday, following the positive signals for Brent Crude and the WTI mix after US President Donald Trump tweeted that the Saudi Arabian and Russia oil leaders had reached an agreement to cut production.

By the end of Thursday’s trading, the Mexican Basket had rallied to gain US$5.44 in value, taking its price from $10.61 to US16.05, according to statements made by PEMEX.

The rebound came after the market responded positively to a tweet from President Trump in which he claimed that Russia and Saudi Arabia, currently engaged in a price war that is flooding the market during a time of low demand, had come to an agreement to reduce production. “I expect and hope that they will be cutting back approximately 10 million barrels,” the president tweeted.

However, yesterday evening it became apparent that no such agreement has been reached, with both Saudi Arabia and Russia denying President Trump’s claim. According to the New York Times, the Kremlin denied the statement made by the US president that Russia’s Vladimir Putin had spoken with Saudi Arabia’s Crown Prince, Mohammed bin Salman. For its part, Saudi Arabia said that it would be looking for a “fair agreement” at OPEC’s April 6 meeting, which the country called to halt prices falling further.

The rising price of the Mexican Crude Basket is only good news for PEMEX. The company is struggling under heavy debt and has recently been downgraded by Standard & Poor’s, while Fitch Ratings publicly announced its intention to review its rating of the NOC by the end of the month.

Despite concerns over the veracity of President Trump’s claims, the positive impact on the market is in no doubt. On Friday, both Brent and WTI barrels are trading up, with a gain of 8.85 percent and 4.70 percent respectively, as of 9.45 a.m., according to OilPrice.com. The price of the Mexican Crude Basket will not be known until later today but traders in the country will be hoping that the barrel can ride the success of other benchmark crudes and keep rising.

The data used in this article was sourced from:  
New York Times, PEMEX, El Economista, OilPrice
Peter Appleby Peter Appleby Journalist and Industry Analyst