(LONDON) Oil prices rose slightly on Tuesday, with prices catching their breath in the wake of big gains after some OPEC members took a surprise decision to cut production.
By 5:30 a.m. EST (11:30 a.m. Paris), a barrel of Brent North Sea crude for June delivery was up 0.42% at $85.29.
Its American equivalent, a barrel of West Texas Intermediate (WTI), for delivery in May, gained 0.53% to 80.85 dollars.
DNB analysts point out that oil supply is expected to be “insufficient” to meet demand from May.
Eight members of the Organization of the Petroleum Exporting Countries and their allies (OPEC) decided on Sunday to reduce their oil production from May until the end of the year. Russia has also extended its production cut until the end of 2023.
OPEC acknowledged the moves Monday during a technical meeting held via videoconference, calling the move a “precaution aimed at supporting oil market stability.”
“Voluntary production cuts are nothing new, but the scale of this latest episode is unprecedented,” notes UBS analyst Giovanni Staunovo.
And “because these are voluntary cuts, the nine members of the OPEC alliance have more leeway to reverse them if conditions warrant,” he explains.
In February, the thirteen OPEC countries pumped 28.92 million barrels per day, according to figures from the alliance, and S
“The oil balance is expected to tighten significantly if the cuts are fully implemented,” warns Tamas Varga of PVM Energy.
For DNB analysts, the cut is such that it could push prices up further in the coming months, especially as the market expects a strong recovery in Chinese demand.