Investing.com investing.com 06 Jan, 2021 07:30 am

OPEC+ To Cut Production Until March, Oil Surges To 10-Month High At $50

OPEC+ To Cut Production Until March, Oil Surges To 10-Month High At $50
Commodities Analysis by Matthew Weller covering: Crude Oil WTI Futures, United States Oil Fund, LP. Read Matthew Weller's latest article on Investing.com

The breakthrough in relations between Russia and Saudi Arabia removes some of the downside risk to oil prices and could lead to continued strength as the global economy recovers later this year.After failing to reach a deal on Monday, oil producing countries led by Saudi Arabia and Russia reached an agreement yesterday to cut production until at least March, sending West Texas Intermediate (WTI) crude prices soaring in midday US trade.In terms of details, Russia and Kazakhstan will increase production by a total of 75K barrels per day, but Saudi Arabia is voluntarily cutting its production by a full 1M bpd through February and March, leading to a net production cut of over 900k bpd.” While the decision to delay planned output increases is bullish for oil prices on its own, the fact that the diverse group of oil-producing countries were able to work through previously-strained relations to coordinate production is perhaps the bigger takeaway; many traders will recall that just last year, a standoff between Russia and Saudi Arabia over production contributed to oil prices briefly crashing into negative territory.

The breakthrough in relations between Russia and Saudi Arabia removes some of the downside risk to oil prices and could lead to continued strength as the global economy recovers later this year.For the first time since February, WTI crude oil touched $50.

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