HISTORIC oil production curbs agreed at the weekend have provided a modest boost to crude prices in spite of concerns they did not go far enough.
The Brent crude price fell yesterday morning as traders reflected on the deal agreed by Opec members and Russia before it moved into positive territory. Brent was up $0.66 per barrel on the day in late afternoon trading on Monday, at $32.14/bbl.
It made modest advances in early trading today.
The so-called Opec Plus group of exporters agreed on Sunday to cut production by a record 9.7 million barrels per day, around ten per cent of the global total, from May.
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The deal brought an end to a price war between Russia and Saudi Arabia which broke out last month after they disagreed about how to respond to the devastating impact of the coronavirus on demand.
Brent crude fell to an 18-year low of less than $20/bbl last month.
The deal was agreed after President Trump put pressure on Saudi Arabia and Russia amid concern about the toll the crude price fall could take on the US oil industry.
Mr Trump tweeted the deal would save hundreds of thousands of thousand of US energy jobs.
“The direct involvement of President Trump to forge this historical deal is the most unusual aspect of it and reflects his visible concern for U.S. shale producers,” said Roger Diwan, vice president financial services, at research heavyweight IHS Markit.
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But while the agreement may have helped avert a meltdown in the market, IHS Markit said prices would remain under pressure in the short term given weakness in demand.
The Rystad Energy consultancy said the production cuts were smaller than the market needed to bring supply into line with demand and noted they will only take affect from May.
The Opec Plus alliance came into being in 2016 as big exporters aimed to support the market after the plunge in the crude price from 2014.
This triggered a deep downturn in the North Sea.
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The price rallied to a four-year high of $85/bbl in October but started to lose ground amid fears about the outlook for the global economy before the coronavirus threat escalated.
Brent sold for $52/bbl early in March.
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