Oil jumps 5% as OPEC+ agrees output rollover for April

BENGALURU: Oil rallied about 5% on Thursday as sources said OPEC and its allies have agreed to keep production unchanged into April.

Russia and Kazakhstan have been allowed modest production increases under the deal, the sources told Reuters.

Brent crude futures were up $ 3.06 or 4.8% at $ 67.13 a barrel by 11:30 a.m. ET (1630 GMT). U.S. West Texas Intermediate (WTI) crude rose about $ 3 or 4.7% at $ 64.17, having earlier scaled its highest since January 2020, at $ 64.51.

Saudi Arabia is considering extending its voluntary oil cuts of 1 million barrels per day by one month into April, an OPEC+ source told Reuters on Thursday.

“If that’s the outcome, then its a far cry from what the market was potentially looking for in a 1.5 million-barrel increase just a couple of days ago, so it’s a change that at least in the short term will reflect in a price bounce,” said Ole Hansen, head of commodity strategy, Saxo Bank.

Some analysts had predicted OPEC+ producers will increase output by about 500,000 barrels per day (bpd).

“It’s a big surprise if OPEC keeps production unchanged in April…this move will keep inventories falling at a fast pace, and with that, oil prices will stay supported and move higher over coming months,” UBS oil analyst Giovanni Staunovo said.

In the United States, despite a record surge of more than 21 million barrels in crude oil stockpiles last week, gasoline stocks fell by the most in 30 years as refining plunged because of the Texas freeze.

Also propping up sentiment, Yemen’s Houthi forces said they had fired a missile at a Saudi Aramco facility in Saudi Arabia’s Jeddah.