OPEC+ to make major production cut; crude prices go up
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New York: International crude oil prices shot up after major producers agreed on major production cut, amid reports of sagging prices.
OPEC+ (The Organization of the Petroleum Exporting Countries plus its allies co-operating in production decisions to support prices) on Wednesday decided to reduce production by 2 million barrels a day starting in November.
The West Texas Intermediate for November delivery increased 1.24 US dollars, or 1.4 per cent, to settle at 87.76 dollars a barrel on the New York Mercantile Exchange. Brent crude for December delivery added 1.57 dollars, or 1.7 per cent, to settle at 93.37 dollars a barrel on the London ICE Futures Exchange.
The decision to cut stemmed from "the uncertainty that surrounds the global economic and oil market outlook," the group said in a statement.
"The production cut is OPEC+'s reaction to the marked price slide of recent months," and would help rebalance the oil market, Carsten Fritsch, energy analyst at Commerzbank Research, said Wednesday in a note.
Following substantial price increases in recent months, consequent on lifting of Covid restrictions and then production disruption caused by the Ukraine war, now the concern is about uncertain demand and growing recession risks. This, coupled with the sharp appreciation of the US dollar , caused oil prices to fall at the end of September to their lowest level since January.
Traders also digested data on US fuel stockpiles.
The US Energy Information Administration (EIA) said that the nation's commercial crude oil inventories decreased by 1.4 million barrels during the week ending September 30. Analysts polled by S&P Global Commodity Insights had expected US crude supplies to show fall of 1.5 million barrels.
According to the EIA, total motor gasoline inventories decreased by 4.7 million barrels last week, while distillate fuel inventories decreased by 3.4 million barrels.
(With inputs from IANS)