On Thursday, oil futures extended gains after increasing approximately 6% the day before, on a surprise move by OPEC to curb crude production.
The Organization of the Petroleum Exporting Countries decided to limit its output to a range of 32.5-33.0 million barrels per day in discussions held on the sidelines of an energy conference in Algeria.
However, how much each country will produce is to be decided at the next formal Organization of the Petroleum Exporting Countries (OPEC) meeting in November, when an invitation to join cuts could also be extended to non-OPEC countries such as Russia.
A decline in U.S. crude stocks for the 4th straight week also supported oil prices.
U.S. West Texas Intermediate (WTI) crude had increased 28 cents to $47.33 a barrel by 0020 GMT, after closing the previous session up $2.38, or 5.3%. Brent crude increased 31 cent to $49.00 a barrel, having settled up $2.72, or 5.9%.
Organization of the Petroleum Exporting Countries will agree to production levels for each member country at its Nov. 30 meeting in Vienna, group officials stated.
That came as U.S. crude stocks decline 1.9 million barrels to 502.7 million barrels in the week to Sept. 23, against analyst expectations for a 3 million barrel increase, data from the U.S. Department of Energy’s Energy Information Administration presented.
“U.S. crude oil inventories are at historically high levels for this time of year,” EIA said in a statement.
Inventories were anticipated to recover after the big decline a few weeks ago, but instead stocks have continued to drop with imports.
“If this proposed (output) cut is strictly enforced and supports prices, we would expect it to prove self defeating medium term with a large drilling response around the world,” Goldman Sachs said in a statement.
On Wednesday, OPEC surprised markets and agreed to production curbs under a formula to reduce production to a range of 32.5 million to 33 million barrels of oil per day from 33.4 million.
Under the conditions, Saudi Arabia, the world’s top producer, is expected to reduce production by 350,000 barrels a day, according to reports.
Suddenly on Wednesday, oil prices plunged as data presented a large build in U.S. gasoline inventories stimulated a selloff that killed an early increase on a surprise decline in U.S. crude stockpiles for a fourth straight week.
Gasoline stocks increase by 2.0 million barrels, greater than the gain of 178,000 barrels predictions.
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