Oil prices rise as producers agree on supply compromise
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 was up 19 cents, or 0.4%, at $48.89 a barrel by 0102 GMT after gaining around 1% on Thursday. West Texas Intermediate 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.