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Oil prices rise as producers agree on supply compromise

Published 12/04/2020, 09:30 AM
Updated 12/04/2020, 09:40 AM
© Reuters.
LCO
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CL
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TOKYO, Dec 4 (Reuters) - Oil prices rose on Friday, heading
for a fifth week of gains, after major producers agreed to
continue to restrain production to cope with coronavirus-hit
demand but the compromise fell short of expectations.
Brent LCOc1 was up 19 cents, or 0.4%, at $48.89 a barrel
by 0102 GMT after gaining around 1% on Thursday. West Texas
Intermediate CLc1 had risen 18 cents, or 0.4% at $45.82 a
barrel.
OPEC and Russia on Thursday agreed to ease deep oil output
cuts from January by 500,000 barrels per day, failing to come to
a compromise on a broader policy for the rest of next year.
"They came up with the ultimate compromise," said Stephen
Innes, chief market strategist at Axi.
OPEC+ will meet once a month to review conditions and
monthly increases will not be greater than 500,000 barrels per
day (bpd).
"These meetings will bring some volatility to the market
and, importantly, stand to make hedging harder for U.S.
producers," Innes said.
The increase means the Organization of the Petroleum
Exporting Countries (OPEC) and Russia, a group known as OPEC+,
are set to reduce production by 7.2 million bpd, or 7% of global
demand from January, compared with current cuts of 7.7 million
bpd.
OPEC+ was expected to continue existing cuts until at least
March, after backing down from plans to raise output by 2
million bpd.
Also supporting prices, Republicans in the U.S. Congress
struck a more upbeat tone on Thursday during coronavirus aid
talks as they pushed for a slim $500 billion measure.
The funding measure was earlier rejected by Democrats who
say more money is needed to address the raging pandemic.

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