Oil Prices Jump As OPEC+ Reaches Preliminary Deal

New legislation proposed by the federal government will ban large oil tankers from stopping or unloading in Haida Gwaii or northern B.C. waters. (File photo/Black Press)

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Russia and Saudi Arabia have reportedly reached a preliminary deal for OPEC+ to gradually increase output by 2 million barrels per day between August and December, Reuters said, citing an unnamed OPEC+ source.

This is this unofficial sourcing coming out of a meeting of the JMMC, which was still ongoing as of 13:00 EDT.

An OPEC panel has proposed monthly increases in output of 0.4 million barrels per day.

Updating on Twitter, Amena Bakr, Deputy Bureau Chief & Chief Opec Correspondent for EnergyIntel, reported that the JMMC was currently addressing some countries’ dissatisfaction with their existing baselines.

Bakr also noted, alongside Reuters, that the talk at the JMMC was for a potential 400,000 bpd per month increase from August to December, cautioning that there has been no official announcement that this proposal has been adopted as of yet.

Reuters also said that oil supply “management” could run into the end of next year.

As of the time of writing, sentiments were bullish, but Brent was pulling back slightly from its price of over $76 this morning, to $75.88 at 13:07 EDT. WTI is trading at $75.23. 

Overall, the market is liking it. The global economy is recovering, and both American shale producers and OPEC have demonstrated the right amount of restraint for the gradual increase proposal to be met with bullish sentiments.

“OPEC is looking like it’s going to keep some restraint, and to me, the market is in a really good place,” Bloomberg quoted Rebecca Babin, senior energy trader at CIBC Private Wealth Management, US, as saying. “People are very comfortable and constructive with the profile over the next year.”

Speaking to Agence France Presse, PVM analyst Stephen Brennock described OPEC’s strategy as “thus far spot on”, saying the cartel “has managed to restore the oil balance without over-tightening the market”.

By Tom Kool for Oilprice.com