OPEC and non-OPEC allies such as Russia will resume talks on Thursday to iron out oil production policy for next year, seeking to build consensus over how to tackle weak demand amid a new wave of coronavirus cases. CNBC’s Brian Sullivan reports. Subscribe to CNBC PRO for access to investor and analyst insights on oil and more:
OPEC and non-OPEC allies, after days of tense discussions, agreed on Thursday to increase production by 500,000 barrels per day beginning in January. This will bring the total production cuts at the start of 2021 to 7.2 million bpd.
Ahead of the meeting, OPEC and its partners, known collectively as OPEC+, were widely expected to extend the current production cut of 7.7 million bpd through at least March. Talks were suspended on Tuesday after it became clear they were unable to reach a compromise.
Oil ministers from the 23-member group, which is composed of some of the world’s largest crude producers, kicked off their meeting around 10 a.m. ET, following a several-hour delay.
“500,000 bpd from January is not the nightmare scenario that the market feared, but it is not what was really expected weeks ago,” said Rystad Energy senior oil markets analyst Paola Rodriguez Masiu. “Markets are now reacting positively and prices are recording a small increase as 500,000 of extra supply is not deadly for balances,” she added.
Following the meeting, international benchmark Brent crude futures traded 1.4% higher at $48.92 per barrel, while U.S. West Texas Intermediate futures stood at $45.80, up 1.15% for the session.
Both price contracts snapped a multiday losing streak in the previous session, closing higher on encouraging Covid-19 vaccine news. Oil prices remain more than 25% lower year to date.
In April, after days of protracted talks, OPEC+ agreed to the largest single output cut in history. The record cut of 9.7 million barrels per day started on May 1 but was subsequently scaled back to 7.7 million in August.
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