Oil gains 5% as Saudi Arabia plans to expand production cuts | Energy News

Riyadh plans to extend its voluntary oil cuts by one million barrels a day until April, Reuters reports.

Oil prices rose nearly 5% on Thursday due to a possible extension of voluntary production cuts by Saudi Arabia until April, as ministers from the Organization of the Petroleum Exporting Countries (OPEC ) and their allies continued to deliberate on the future of supply reductions.

Global benchmark Brent crude futures rose $ 3.04, or 4.7%, to $ 67.11 a barrel at 10:57 a.m.ET (15:57 GMT), while U.S. crude United West Texas Intermediate (WTI) rose $ 2.84 or 4.6% to $ 64.12.

Ministers of the Organization of the Petroleum Exporting Countries and its allies began a meeting at 13:00 GMT to discuss the future of reduced oil production.

Saudi Arabia plans to expand voluntary oil cuts by one million barrels per day (bpd) to one month in April, an OPEC + source told Reuters news agency on Thursday. .

“If this is the result, then it’s a far cry from what the market was potentially looking for in a 1.5 million barrel increase just a few days ago, so it’s a change that, at least in the short term. term, will result in a price. bounce back, ”said Ole Hansen, head of commodities strategy at Saxo Bank.

Analysts and traders say a four-month price hike of less than $ 40 a barrel lags demand and physical sales are unlikely to match supply until later in 2021.

But with prices above $ 60, some analysts predicted OPEC + producers would increase production by around 500,000 bpd.

In the United States, despite a record increase of more than 21 million barrels of crude oil inventories last week, gasoline inventories have fallen the most in 30 years, with refining plunging to a record low due to a winter frost in the oil-producing state. from Texas.

Also supporting the sentiment, Yemen’s Houthi forces said they fired a missile at a Saudi Aramco facility in the Saudi city of Jeddah on the Red Sea. There was no immediate confirmation from the Saudi authorities.

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