/ Photo taken on November 26, 2018 / REUTERS / Vivek Prakash
- Saudi Arabia, Russia and main OPEC allies agreed on Thursday to cut crude oil production, a move that is expected to push prices up.
- The deal ended an oil price war that raged on for weeks while the Saudis and Russians reported increased production, diluting the price of the resource per barrel.
- In the United States, West Texas Intermediate crude oil rose 12%, while Brent crude rose 11% to intraday highs.
- Oil canceled out the gains and fell into negative territory during afternoon trading in New York, as investors expressed disappointment at the level of production cuts.
- Watch the oil trade live on Markets Insider.
Oil fell on Thursday – erasing previous gains of 12% – as investors expressed disappointment at the level of production cuts agreed by Russia, Saudi Arabia and OPEC +.
US crude West Texas Intermediate slipped 6% to $ 23.39 a barrel. Crude oil Brent, the international benchmark, lost 2.7% to $ 31.95 per barrel. Both saw the double-digit gains disappear as the details of the deal emerged.
The deal was born out of a virtual meeting on Thursday during which OPEC + agreed to cut production by 10 million barrels a day. This is far from the drop in demand of 35 million barrels per day expected as a result of the coronavirus epidemic.
OPEC + should also seek a reduction in production of 5 million barrels per day for the G20 countries, reported Bloomberg. Thursday’s talks will set the pace for a Friday meeting with G20 countries, including the United States, another key player in the oil market.
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The product dropped during the coronavirus pandemic, which cratered global demand because the flights were canceled and consumers were asked to stay at home. Meanwhile, OPEC + was unable to agree on further production cuts after April 1, prompting Saudi Arabia and Russia to prepare to resume production at lower prices. record levels.
This has pushed prices down further, with analysts and industry observers predicting even more pain. The US Energy Information Administration reduced its outlook for 2020 this week and said it would be a net importer of crude oil and petroleum for the first time since 2019 in an effort to facilitate talks.
However, analysts fear that the production cuts will not be enough to drastically increase low oil prices. If not, oil could fall below $ 20 a barrel again, according to RBC.
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