Crude oil jumped on Thursday amid reports that the OPEC alliance had agreed to a deeper 1 million barrels per day cut to already low production levels, yet prices failed to sustain those gains amid a lack of clarity on the new agreement.
Traders have become more convinced that OPEC+ will not be able to meet the promised production cuts.
There was no collective statement mentioning individual changes to quotas, and each country announced its cuts.
Riyadh has agreed to extend the voluntary output cut by 1 million barrels per day, an energy ministry source told SPA.
Russia has also deepened its voluntary supply cut to 500 thousand barrels per day through the end of the first quarter, according to a statement from Deputy Prime Minister Alexander Novak.
Iraq reduced 223000 Barrels per day, the United Arab Emirates 163,000 Barrels per day, Kuwait 135,000 Barrels per day, Kazakhstan 82,000 Barrels per day, Algeria 51000 Barrels per day, and Oman 42,000 Barrels per day.
Traders are concerned that these cuts are voluntary rather than mandatory, raising questions about whether or not OPEC is actually able to follow through and shrink production.
In addition, the press release says the next meeting will not take place until next June, but reports say the new voluntary cuts will only be for the first quarter.
So what happens in the second quarter? Of course, they can always schedule a meeting, but the market always loves the plan.
