Crude oil prices increased after OPEC and its allies agreed to extend oil supply cuts into April as they expect a stronger demand recovery amid the Covid-19 pandemic.
Brent crude climbed by $0.10, or 0.2%, to reach $66.84 a barrel while the US West Texas Intermediate (WTI) crude futures rose by $0.17, or 0.3%, to reach $64.00, reported Reuters.
The increase in two contracts by more than 4% follows the decision by the Organization of the Petroleum Exporting Countries and allies, together called OPEC+, not increase oil output, except to Russia and Kazakhstan.
CMC Markets chief market strategist Michael McCarthy said: “It just goes to show how much of a surprise the OPEC+ discipline is.
“What makes the gain even more impressive is that it comes against a risk-off backdrop and a higher US dollar.”
Saudi Arabia previously voluntarily agreed to maintain a cut of one million barrels per day until April, despite the recovery of the oil prices over the past two months.
Commonwealth Bank commodities analyst Vivek Dhar was cited by the news agency as saying: “The group’s supply discipline shows that Saudi Arabia’s preference for caution is being adhered.”
Analysts are making price forecast review pertaining to the OPEC+ oil supply cuts, as well as US shale producers who seek to improve returns to investors by curbing spending.
OANDA analyst Edward Moya was reported by Reuters as saying: “Oil prices could rip higher now that a tight market is likely up through the summer. WTI crude at $75 no longer seems outlandish and Brent could easily top $80 by the summer.”