Oil prices jump after Opec+ inks supply compromise


TOKYO: Oil prices jumped around 2% on Friday, heading for a fifth week of gains, as major producers agreed on a compromise to continue some cuts to production to cope with coronavirus-hit demand even though these fell short of expectations.

Brent was up 93 cents, or 1.9%, at $49.64 a barrel by 0748 GMT after gaining around 1% on Thursday. West Texas Intermediate rose 76 cents, or 1.6%, to stand at $46.40 a barrel, having risen nearly 1% in the previous session.

Opec and Russia on Thursday agreed to ease deep oil output cuts from January by 500,000 barrels per day, but failed to come to a compromise on a broader policy for the rest of next year.

"Opec+ clearing the hurdle of exiting its current cuts in a coordinated way... reinforces our conviction in a steady and sustainable rally in oil prices through 2021," Goldman Sachs said in a report after the decision.

The increase means the Organization of the Petroleum Exporting Countries (Opec) and Russia, a group known as Opec+, are set to reduce production by 7.2 million bpd, or 7% of global demand from January, compared with current cuts of 7.7 million bpd.

Opec+ was expected to continue existing cuts until at least March, after backing down from plans to raise output by 2 million bpd.

Also supporting prices, a bipartisan $908 billion coronavirus aid plan gained momentum in the U.S. Congress on Thursday.

Brent crude futures for nearby delivery are trading at a premium to future months, a structure called backwardation, which usually points to supplies tightening up and suggests receding fears of a glut. - Reuters

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 18
Cxense type: free
User access status: 3

Opec+ , Opec , production

   

Did you find this article insightful?

Yes
No

Next In Business News

Biden's return to Paris pact just a first step for US climate action
UK will submit request to join CPTPP trading bloc soon
Oil price rises on US stimulus hopes, tighter market under Biden
Netflix Stock Soars to All-Time High on Q4 Subscriber Beat, Cash Flow Guidance
Wall Street closes at record highs as earnings jump, Biden inaugurated
Keeping the rate cut option
Malaysia Aviation Group moves forward in its revamp exercise
Double-digit earnings growth for most sectors
Malaysia Aviation Group moves forward in its restructuring exercise
Axis REIT posts lower FY20 net profit

Stories You'll Enjoy