Brent oil price jumped significantly on Thursday hitting its highest level since February of last year after major oil producers of OPEC+ expressed full conformity to the production cuts while a more-than-expected decline in US crude inventories eased investor demand fears.
International benchmark Brent crude was trading at $59.01 per barrel at 0748 GMT on Thursday with a 0.54% increase after closing Wednesday at $58.69 a barrel. This is the highest level since Feb. 21 when Brent was trading at $59.25.
American benchmark West Texas Intermediate (WTI) traded at $56.08 per barrel at the same time for a 0.70% increase after it ended the previous session at $55.69 a barrel.
At the 26th meeting Wednesday of OPEC’s Joint Ministerial Monitoring Committee (JMMC), the group expressed its full commitment to the output cut decisions taken in the December meeting to rebalance the market amid pandemic-driven low demand.
OPEC pointed to Saudi Arabia’s additional voluntary supply adjustment of 1 million barrels per day (bpd) starting from Feb. 1 for two months and confirmed that the group’s overall conformity with the original production adjustments was 101%.
In line with the decision taken in an OPEC meeting in December, the group, including OPEC members and its allies, known as OPEC+, agreed to increase overall output cuts to 8.125 million bpd for February and 8.05 million bpd in March, including the 1 million bpd cut from Saudi Arabia, the de-facto OPEC leader and driver of OPEC+ production cuts.
The group noted that while the economic outlook and demand for oil would remain uncertain in the coming months, the gradual worldwide roll-out of vaccinations is seen as a positive factor for the rest of the year, boosting the global economy and oil demand.
OPEC said its members Kazakhstan and Iraq expressed their full commitment to compensate for overproduced volumes.
“Over past months, Kazakhstan has taken steps to not only realize full conformity to its production adjustment, but also to compensate for overproduced volumes,” the group said in a statement on Wednesday.
The group also said Iraq remains resolute to the decisions taken at previous OPEC+ meetings to rebalance the market and achieve much needed sustainable stability.
The attainment of 100% conformity from all member countries, and compensating for overproduced volumes, is both fair and equitable to all participating countries, the group said.
-US crude stocks decline to 11-month-low levels
A more-than-expected decline in the US crude inventories also supported oil prices.
US oil stocks declined last week to their lowest level since March of last year, signaling a crude demand rebound in the US, the world's largest oil consumer.
Inventories fell by 1 million barrels, or 0.2%, to 475.7 million barrels, relative to the market expectation of a build of 367,000 barrels, according to data released by the country's Energy Information Administration (EIA) on Thursday.
By Sibel Morrow