Why oil prices rallied after OPEC+ said it will gradually raise production

Market Wacth2021-04-02

The decision by the Organization of the Petroleum Exporting Countries and their allies, together known as OPEC+, to gradually raise crude production from May through July led to a somewhat surprising ...

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Comments

Coolboy750
2021-04-02
Coolboy750
Like pls
NCM
2021-04-02
NCM
Read
Jayden1818
2021-04-02
Jayden1818
Yay
Chounz
2021-04-02
Chounz
Liek and comment pls
- NCM:
  Ok
IamBolt
2021-04-02
IamBolt
Like and comment
- SakuraTrader:
  nice
- Ak91:
  Ok
snrocirpa
2021-04-02
snrocirpa
Comment
- Kingkong1234:
  Like and comments
- ZBM:
  Done! Response to my comment too thks!

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It will ease the per-day reduction by 250,000 barrels in May, by 350,000 barrels in June and by 400,000 barrels in July. That means the Saudis would essentially stop their voluntary cut in July.\n“The agreement is supportive of oil prices, yet should also help avoid a sharp spike upward as oil demand picks up,” said Ann-Louise Hittle, Wood Mackenzie’s vice president, Macro Oils, in emailed commentary.\nWood Mackenzie forecasts a “strong recovery in oil demand by the third quarter for the U.S.” and expects total global oil demand to gain 6.2 million barrel per day year on year in 2021, she said.\nThe Saudi’s move to add more oil is a “key takeaway” from the meeting, said Peter McNally, global sector lead for industrial, materials and energy at Third Bridge. “After months of restraining production, Saudi Arabia will gradually add barrels back, although this will be offset by compensation barrels from other members.\nOPEC+ extended the amount of time countries have to make up for production above their quotas to the end of September.\nThe group will alsocontinue to assess oil market conditions monthly, and decide on whether to adjust production, up or down, for the following month by no more than 500,000 barrels per day.\nThe production decision “shows that patience was exhausted among many producers, who could not accept that some countries — and mainly Russia — was allowed to constantly hike their production while others kept it flat,” said Louise Dickson, oil markets analyst at Rystad Energy.\n“The output rise is not likely to be detrimental, especially for June and July as demand will likely also rise, and that is reflected in the market reaction, which is not a panic one to slash price levels,” she said in emailed commentary.\n“The output rise is not likely to be detrimental, especially for June and July as demand will likely also rise…”\n— Louise Dickson, Rystad Energy\nOn Thursday, May West Texas Intermediate crudeCLK21,+3.52%CL.1,+3.52%added $2.29, or 3.9%, to settle at $61.45 a barrel on the New York Mercantile Exchange, after touching a fresh intraday high at $61.75 following the OPEC+ announcement.\nJune Brent crudeBRNM21,-0.32%BRN00,-0.32%tacked on $2.12, or 3.4%, to end at $64.86 a barrel on ICE Futures Europe.\n“The bottom line is that the oil market is getting another nearly 2 million barrels per day over the next three months,” said Dickson. “We always knew these barrels would return eventually, the question now is if they are coming too early versus what the market can digest.”\nOPEC+ will hold its next meeting on April 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