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Oil prices rose early on Friday, heading into a fifth week of gains, after OPEC + managed to seal a compromise deal on its oil production policy early next year, presenting a united front of a unanimous decision after days of disagreement.
At 8:51 a.m. ET on Friday, WTI Crude was up 1.03% to $ 46.06 and Brent Crude was approaching the $ 50 per barrel mark, up 1.13% on the day at 49, $ 25.
After days of debate, OPEC + decided on Thursday that the group would add 500,000 barrels per day (b / d) to its oil production quotas in January, which currently calls for a production cut of 7.7 million. b / d. The total production reduction in January will now be 7.2 million bpd. Future allocated quotas could go up or down, and to determine those oil production levels beyond January, OPEC + ministers will hold additional meetings – one per month.
Although the OPEC + group failed to deliver the most anticipated outcome – a three-month extension of the current level of cuts, the fact that the alliance managed to come out of this week’s meeting in full and with some sort of move reassured the market that neither the alliance nor the cartel would break down, at least for the next month or so.
“With the expected recovery in global vaccine-related fuel demand, this deal will go a long way in ensuring that the price of oil remains sustained until it can stand unsupported. Brent is likely to print $ 50 / bbl as soon as possible with already strong Asian demand that will eventually be joined by others once the Covid-19 cloud emerges, ”John Hardy, chief strategy officer, said on Friday. exchange rate at Saxo Bank.
“Although the agreement is slightly below expectations, it seems above all more certain that the oil market will be in deficit during the first quarter of next year, and that the market should therefore continue to reduce inventories,” a said Warren Patterson, head of commodities strategy at ING.
By Tsvetana Paraskova for OilUSD
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