The price of West Texas Intermediate crude (WTI) stabilized on Friday, after rising nearly 5 percent, as OPEC’s decision to raise crude oil output was less than some producers had hoped — easing investors’ fears that a wave of crude oil would curb oil prices.
On the New York Mercantile Exchange, futures for August delivery rose 4.6%, to settle at $68.58 a barrel, while London Brent crude rose 3.4% to trade at $75.55 a barrel.
The Organization of the Petroleum Exporting Countries agreed on Friday to reduce crude oil production, paving the way for the entry of new crude supplies to the market, reducing the risk of shortages in global crude oil inventories. OPEC said it wanted the countries involved in the cut-off agreement to increase output and return to 100 percent compliance with agreed quotas by July 1, 2018.
The call comes from OPEC, asking members to return to agreed prices at a time when member states to reduce production more than required. Increasing the commitment by 52% above the agreed production limits of November 2016.
While the world oil organization appeared reluctant to give specific figures on quotas, Saudi Arabia, the world’s top crude exporter, said the move would be equivalent to a rise in production of about 1 million barrels per day, or 1 percent of the world supply. However, a group of oil experts and analysts have suggested that a number of producers in the OPEC-led agreement will struggle to increase production, leading to a more modest increase in crude production.
“It is important to note that the market should see an actual increase of about 600,000 barrels per day because a number of countries in the agreement are unable to increase production,” it said. The deal comes a day after Saudi Arabian Minister of Energy, Khalid al-Falih, announced that the cut-off agreement, initially agreed in November 2016, had achieved its goal of rebalancing the oil market and restoring world stocks to the five-year average.
Market sentiment also contributed to the decline in crude oil prices as oil market experts predicted a possible slowdown in US domestic production. The number of oil drillers operating in the United States also fell to 862, according to data from energy services firm Baker Hughes.
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