OPEC+ : Saudi Arabia, on Monday, claimed that it would complement the existing cuts by decreasing the output by another 1 million bpd next month. It would bring down the total production to 7.5 million bpd which amounts to nearly 40% from April. The United Arab Emirates and Kuwait also agreed to reducing an additional 180,000 bpd in total output.
In April, OPEC+ which is a group consisting of OPEC and its allies made a decision to cut output by 9.7 million barrels per day (bpd) for the coming months of May and June. OPEC and its allies are interested to maintain the 9.7 million bpd cut beyond the month of June. It is the same time when OPEC+ group is next due to meet.
“The idea that the Saudis and Kuwaitis and the UAE said that they’re going to enact deeper cuts than they initially agreed upon is helping the market find support,” said Gene McGillian, vice president of market research at Tradition Energy in Stamford, Connecticut.
This is a major decision to a record reduction which comes in response to the 30% drop in fuel demand across the world. This decline is majorly caused by the outbreak of the novel coronavirus pandemic. The group was expected to stick to the reduction to 8 million bpd decided earlier but now they instead expect OPEC+ to maintain the larger reduction.
U.S. West Texas Intermediate (WTI) crude futures settled at $25.78 a barrel, up $1.64, or 6.8% whereas Brent crude futures settled at $29.98 a barrel, gaining 35 cents, or 1.2%.