On Thursday, both US and UK crude oil futures’ prices had perked up more than 3 per cent following media headlines that the Saudi-led 14-member OPEC (Organization of Petroleum Exporting Countries) alongside Kremlin-backed oil exporting nations, widely dubbed as OPEC+, had reached an accord to gradually ease output curbs starting from May this year, bolstering analysts’ views that the OPEC+ nations had been heavily cashing in on a solid economic recovery in a near term.
In point of fact, Thursday’s OPEC+ decision to gradually peter out output cuts came forth a day after the US President Joe Biden had unwrapped an ambitious $2 trillion-plus infrastructure investment proposal, fleshing up hopes of a recovery in US labour market amid a sharp uptick in new orders for US-borne core capital goods, which would likely to stem an upsurge in oil demands, said analysts.
Apart from that, the disbursement of another $1.9 trillion pandemic stimulus bill that the US President Joe Biden had signed off into a law earlier last month, added further cushions on high-flying crude oil futures’ prices.
Nevertheless, in the day’s maverick upswing in crude oil futures’ prices was mostly catalysed by the OPEC+ decision to downsize production cuts in multiple phases, while under Thursday’s deal, OPEC+ member states would ease output cuts by 350,000 barrels per day (bpd) in May, further 350,000 bpd in June alongside an approximated 400,000 bpd in July.
Crude oil rallies as OPEC+ bets on a solid economic recovery
Citing statistics, in the day’s commodity market wind down, UK crude futures’ prices feathered 3.1 per cent to $64.68 a barrel, while US WTI (West Texas Intermediate) crude futures surged 3.6 per cent to settle down at $61.26 a barrel.
Meanwhile, as Russian Deputy Prime Minister Alexander Novak was quoted saying following the agreement that he was expecting the global crude oil inventories - a critical parameter for oil prices – would roll back to normal level in two to three months and global oil demands would pick up by 500,000 bpd to 550,000 bpd this year, however, Saudi Energy Minister Prince Abdulaziz bin Salman, who happens to be a step-brother of Crown Prince Mohammed bin Salman, said late in the day that an oil market recovery was “far from complete”.