Oil Retreats as OPEC-Driven Rally Hits Resistance at $80 Barrier - Yahoo Finance
Oil Steadies Near This Year’s High as OPEC+ Extends Output Cuts
(Bloomberg) -- Oil steadied near the highest level this year after the OPEC+ alliance extended its production cuts to the end of next quarter.
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Brent futures traded above $83 a barrel after rising 2% on Friday. US benchmark West Texas Intermediate was close to $80, having breached the psychological level on Friday for the first time since November. The Organization of the Petroleum Exporting Countries and its allies extended their roughly 2 million-barrel-a-day reduction through the end of June, with Russia pledging added emphasis on cuts to production rather than exports.
Traders and analysts had widely expected the move by OPEC+, seeing it as necessary to offset a seasonal lull in demand and soaring output from other producers. The latest cuts will be returned gradually subject to market conditions, OPEC’s Secretariat said in a statement.
“If fully implemented, these new cuts will remove additional barrels from the market and help keep the oil market undersupplied,” said Giovanni Staunovo, a commodity analyst at UBS Group AG. “Market participants will continue to track crude and refined product exports to assess the compliance level of those production cuts.”
Read More: OPEC+ Extends Oil Cuts, With Russia Bolstering Its Effort
Crude has been on a slow, but steady, ascent this year. Widening timespreads signaled tighter physical conditions driven by a host of disruptions, including attacks on ships in the Red Sea. Still, delayed expectations for when the Federal Reserve will start to lower interest rates, strong production from outside OPEC+ and a shaky Chinese demand outlook have capped gains.
The rally this year has also flushed hedge funds’ short positions out of the market. Money managers’ combined short bets against Brent and WTI are at the lowest since October, data from ICE Futures Europe and the US Commodity Futures Trading Commission show.
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Related Knowledge Center: ENERGY BASICS: petroleum
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