Oil prices show a strong rebound Monday morning after a number of OPEC+ alliance countries, including Russia and Saudi Arabia, announced additional production cuts.
June Brent futures on London’s ICE Futures exchange stood at $83.82 a barrel by 8:10 a.m. Q, up $3.93 (4.92%) from the previous session’s closing price. At the close of trading last Friday those contracts grew by $0.50 (0.6%) to $79.77 per barrel.
The price of WTI crude oil futures for May at the electronic trading on the New York Mercantile Exchange (NYMEX) is $79.51 per barrel by that time, which is $3.84 (5.07%) above the final value of the previous session. The contract rose by $1.3 (1.8%) to $75.67 a barrel on Friday.
Brent dropped 4.9% in March and 7% in the first quarter, writes MarketWatch. Futures on WTI have lost 1.8% and 5.7%, respectively, and the monthly decline was the fifth consecutive for the North American brand.
On Sunday evening, 8 of the 20 OPEC+ countries announced a voluntary reduction in oil production from May until the end of the year. The announcement was made ahead of Monday’s meeting of the OPEC+ monitoring committee (JMMC).
Interfax estimated the total reduction in oil production to be about 1.657 million bpd, of which 500,000 bpd would come from the deal’s leaders, Russia and Saudi Arabia. Non-OPEC countries, such as Kazakhstan, are going to reduce production by 78 thousand bpd, and Oman – by 40 thousand bpd. Among the OPEC members, the production is going to be reduced by 144,000 bpd in the UAE, 128,000 bpd in Kuwait, 211,000 bpd in Iraq, 48,000 bpd in Algeria and 8,000 bpd in Gabon.
“Producers are clearly unhappy with the recent drop (in oil prices – IF), which was more speculative than caused by fundamental factors. They are likely to be able to get quotes back above $80 a barrel, plus they are trying to respond preemptively to a smaller-than-expected increase in global oil demand in the coming months,” Saxo Bank analysts Ole Hansen said in an interview with MarketWatch.
“The Saudi oil minister likes to take the market by surprise, especially when it could hurt downside speculators,” he added.
