By Florence Tan
SINGAPORE, April 3 (Reuters) - Oil prices jumped more
than $5 a barrel on Monday's open, jolted by a surprise
announcement by OPEC+ to cut production further in an effort to
support market stability.
Brent crude hit the highest in nearly a month at the
open, trading at $85.56 a barrel by 2249 GMT, up $5.67, or 7.1%.
U.S. West Texas Intermediate crude touched its
highest since late January and was at $81.08 a barrel, up $5.41,
or 7.2%.
The Organization of the Petroleum Exporting Countries and
their allies including Russia, shook markets by announcing
production cuts of about 1.16 million barrels per day on Sunday.
The group known as OPEC+ had been expected to maintain its
earlier decision to cut output by 2 million bpd until December.
The pledges bring the total volume of cuts by OPEC+ to 3.66
million bpd according to Reuters calculations, equal to 3.7% of
global demand.
As a result, Goldman Sachs lowered its end-2023 production
forecast for OPEC+ by 1.1 million bpd and raised their Brent
price forecasts to $95 and $100 a barrel in 2023 and 2024,
respectively, its analysts said in a note.
"Today’s surprise cut is consistent with the new OPEC+
doctrine to act pre-emptively because they can without
significant losses in market share," the bank said.
"While surprising, this cut reflects important economic and
likely political considerations."
Goldman estimated the output reduction could provide a 7%
boost to oil prices, contributing to higher Saudi and OPEC+ oil
revenues.
The Biden administration said it saw the move announced by
the producers as unwise.
(Reporting by Florence Tan; Editing by Lincoln Feast)
florence.tan.thomsonreuters.com@reuters.net))
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.