(Reuters) – Saudi Arabia and Russia led a deal on Friday in which OPEC and its allies committed to deeper oil output cuts in the first quarter of 2020 aiming to avert oversupply and support prices. The group of more than 20 producers agreed to cut an extra 500,000 barrels per day (bpd) to take their target to 1.7 million bpd, or 1.7% of global demand. Saudi Energy Minister Prince Abdulaziz bin Salman said effective cuts could be as much as 2.1 million bpd as Saudi would carry on cutting more than its quota. Here is what analysts expect in terms of market response: Amrita Sen, co-founder, Energy Aspects ** “A tight crude oil market, weak refining margins environment, no excess inventory as such which Saudi Arabia was acutely aware of and yet it also knew the pervasive bearish sentiment that is prevalent, which meant without a “surprise”, the risk to prices correcting lower was significant. ** “They had to protect the downside to prices without over-tightening an already tight physical market. Newly appointed Saudi Energy Minister Abdulaziz bin Salman’s goal was not necessarily to push oil prices significantly higher, but rather to put a firm floor under them during… continue reading
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Source: CTRM Center