Oil prices rose on Monday after major producers accepted the largest production cuts ever. However, gains were limited due to concerns that it would not be enough due to the coranvirus suppresses the demand.
After a four-day struggle, the Organization of the Petroleum Exporting Countries (OPEC), Russia, and other producers known as OPEC + agreed to cut 9.7 million barrels (bpd) daily to support oil in May and June on Sunday.
Brent crude LCOc1 futures rose 16 cents, or 0.5%, to $31.64 a barrel by 0709 GMT after opening at a session high of $33.99. West Texas Intermediate (WTI) crude CLc1 futures were up 37 cents, or 1.6%, to $23.13 a barrel, after hitting a high of $24.74.
Saudi Arabia, Kuwait, and the United Arab Emirates said they are willing to cut even deeper cuts than understood, and may reduce OPEC + supply by 12.5 million bpd from current supply levels.
However, analysts have doubts with the possible adaptation of the producers to the cuts and adding that the actual discounts may not be as high as the volume promised by the manufacturers.
The deal has been delayed since Mexico’s objection Thursday. The OPEC + group met on Sunday to secure the deal, accepting a cut in production which is previously four times more than the record drop in 2008.
OPEC + also stated that it wants producers rather than the group, such as the US, Canada, Brazil and Norway, to cut another 5% or 5 million bpd.
Canada and Norway pointed to their intention out to the cuts. The United States, where antitrust legislation makes it difficult to act together with groups such as OPEC, said its production could drop by 2 million bpd this year without planned cuts due to low prices.
However, optimism on the long-term impact of OPEC + cuts raised expectations for the coming months and expanded the Brent contango.
Some analysts raised Brent price estimates to $ 35 and $ 45 for the third and fourth quarters.
