UK crude oil futures spike to pre-pandemic level after OPEC+ output cut deal

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UK crude oil futures spike to pre-pandemic level after OPEC+ output cut deal

On Thursday, both US and UK crude oil futures’ prices gained as much as 1 per cent after the Saudi-led 14-member OPEC (Organization of Petroleum Exporting Countries) nations alongside their Kremlin-led rallies had cut a deal to hike oil productions by a marginal 500,000 barrels per day from January, while the UK crude futures’ prices had hit an eight-month high, a level never seen since the OPEC+ nations had agreed to a number of historic output cuts in a bid to grapple with a pandemic-squeezed global demand.

In factuality, apart from an OPEC+ deal, rising hopes over a near-term rollout of pandemic vaccines had undermined the frets of a clattering drawdown in demands, while an upbeat China factory activity data released earlier this week revealing the world’s second-largest economy’s manufacturing activities had surged by the steepest pace in decades last month, obliviated market participants’ concerns and added to further bullish wing to investors’ optimism.

Crude oil futures feather after OPEC+ output cut deal

In tandem, according to the OPEC+ output cut deal agreed on Thursday, the OPEC+ countries would move forward to slash production by 7.2 million barrels per day from January, warding off a stubborn stance to increase output by a much-larger scale as cited earlier this year.

At this standpoint, OPEC+ nations are scheduled to curb oil outputs by 7.7 barrels per day or roughly 7 per cent of the world’s entire crude oil productions until December 31. On top of that, followed by a week-long debate over the extent of output cut, OPEC+ nations had also reached an accord to extend the existing production cuts at least until March 2021, backing off from an earlier decision to bolster output by 2 million barrels per day from January as beforemtioned.

Citing statistics, in the day’s commodity market round off, the Brent crude futures’ prices climbed 1 per cent to $48.71 per barrel, remarking the highest level since early-March, while the US West Texas Intermediate crude oil futures’ prices added 0.8 per cent to settle down at $45.64 a barrel.

Meanwhile, citing a negligible rise in crude oil output from January alongside OPEC+ ministers commitment to meet on a monthly basis to a spot-fixing of output limits based on the development over a war that the ongoing pandemic had waged on the world, a senior oil market analyst at Rystad Energy, Paola Rodriguez said, “Markets are now reacting positively and prices are recording a small increase as 500,000 (bpd) of extra supply is not deadly for balances”.