Oil futures stretched their gains to a second session Wednesday, as Saudi Arabia and Russia reportedly held a discussion by phone, reiterating the OPEC+ commitment to abide by the production-cut agreement.
West Texas Intermediate crude for November delivery climbed by 84 cents, or 2.1%, to settle at $41.04 a barrel on the New York Mercantile Exchange, following a rise of almost 2% Tuesday. December Brent crude, the global benchmark, added 87 cents, or nearly 2.1%, at $43.32 a barrel on ICE Futures Europe.
A report by the International Energy Agency, however, underlined fears an acceleration in new COVID-19 cases around the world will dent demand for crude, limiting gains for prices reported MarketWatch.
The Organization of the Petroleum Exporting Countries and their allies, together known as OPEC+, appear to “remain committed to output cuts according to its de facto leaders,” said Robbie Fraser, senior commodity analyst at Schneider Electric.
“Both Russia and Saudi Arabia have reaffirmed that commitment in recent statements, and the group is expected to generally maintain record cuts into 2021,” he said in a note.
That comes despite some weaker cooperation among some of the group’s smaller members, as well as the prospect of increased Libyan output,” he said, adding that Libya remains an OPEC member, but is exempt from the OPEC+ agreement.
OPEC+ members “will likely adopt a wait-and-see approach and not pursue new policies, since the market seems to be in balance and they will be cautious not to mess with the fragile recovery recently achieved,” said Manish Raj, chief financial officer at Velandera Energy.