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By TAYO ELEGBEDE
Larger percentage of the respondents to a poll feel the move to cut oil production will support oil prices.
54 respondents to the poll by the Offshore Technology to assess the impact of the agreement by members of the Organization of the Petroleum Exporting Countries (OPEC) on a cut in oil production raise hopes of a price rally while 46 percent thinks otherwise.
Analysis of the poll results,which was compiled from 1st May to 1st June from 369 respondents was the outcome of the Organisation and its production allies decision to cut production by 9.7 million barrels per day (Mbpd), in April 2020 and subsequently by 7.7Mbpd from July through December.
The move which commence in May and expected to span to next year gained the support of many member states and industry players, even though some experts opine that it may not be enough to deal with the slump in demand.
According to Reuters, Saudi Arabia has also announced a voluntary production cut of one million bpd from June along with Gulf OPEC producers including United Arab Emirates (UAE) and Kuwait, which have announced an 180,000bpd production cut.
Production cuts and easing of lockdown restrictions in certain countries are expected to ease pressure on storage capacities and revive oil prices.
Meanwhile, a meeting of both OPEC and non-OPEC allies this month to review price cut for the month of June is still possible to hold this week and that the date of a virtual meeting to finalise an agreement was still unclear yet.
Brent crude futures traded at $39.50 a barrel during early afternoon deals, down more than 0.6%. The international benchmark rose above $40 a barrel for the first time since March 6 in the previous session, before erasing those gains amid OPEC+ uncertainty.
U.S. West Texas Intermediate (WTI) crude futures stood at $36.78 a barrel, almost 1.4% lower. The contract also climbed to its highest level since early March on Wednesday.
However, some experts are of the opinion that much of the supply side adjustment was from OPEC, so if they were to unwind these cuts, and release more barrels to the market, the results would be dare.
Hence,what is good for the oil market is an extension of the agreement and that Russia and Saudi Arabia tol stick to the baseline agreement.
The agreement on production cut was designed to prop up prices as the coronavirus pandemic led to an unprecedented collapse in oil demand.
ELEGBEDE TAYO OREDOLA , a journalist with five years professional experience is self motivated and a team player. Her experience came from diverse media, like The Guardian Newspaper, Radio Nigeria among others and now with the INSIDEBUSINESS in the bid to explore the new media.
Email: [email protected]
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