Oil Prices Jump By 4% After Agreement To Cut Production By 9.7 Mbpd

On Monday, oil prices jumped by more than $1 per barrel after leading producers in OPEC + meet agreed to cut oil production given the slumping demand due to the pandemic. But the gains remained capped as there are still concerns that the oil markets may continue to face headwinds and this agreement shall not be sufficient to mitigate the oversupply crisis.

There has been agreed that production shall be dropped by output by 9.7 million barrels per day (bpd) which has been nearly halved amid the pandemic outbreak.

Total global oil supply cuts could come to 20 million barrels per day, around 20 percent of global supply, Kuwait's oil minister said.

Brent crude futures surged USD 1.23, or 3.9 percent, to USD 32.71 a barrel by 0058 GMT after opening at a session high of USD 33.99. US West Texas Intermediate (WTI) crude futures were up USD 1.39, or 6.1 percent to USD 24.15 a barrel, after hitting a high of USD 24.74.

US President @realDonaldTrump tweets after the OPEC+ finalises deal to cut production by 9.7 million barrels/day, says the deal will save 'hundreds of thousands of energy jobs in the United States' #Oil #Crude pic.twitter.com/PHB09LNZLj

— CNBC-TV18 (@CNBCTV18Live) April 13, 2020

This cut will enable the industry from the crisis further deepening said the IHS Markit executive..

"This restrains the build-up of inventories, which will reduce the pressure on prices when normality returns - whenever that is."

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