NEW YORK- The oil prices rose on Thursday after the news that OPEC reached a deal to gradually ease production cuts from May.
Brent crude sank$ 1.94, or 3.1%, to$ 64.68 a barrel by 1: 25 p.m. EST. U.S. oil was up$ 2.10, or 3.6%, at$ 61.26 a barrel.
OPEC which includes the Organization of the Petroleum Exporting Countries, Russia and other producers agreed to ease production limits in May with further 350,000 barrels per day in June and another 400,000 barrels or so in July.
Under the Thursday deal, cuts implemented by OPEC would be just above 6.5 million bpd from May, compared with slightly below 7 million bpd in April.
On Thursday, the Russian Deputy Prime Minister Alexander Novak said that he hoped that global oil inventories, a key parameter for the oil industry, would return in 2 to 3 months to their normal levels.
Jennifer Granholm, the new energy secretary appointed by US President Joe Biden, had called on OPEC leader Saudi Arabia over policy and said energy should be kept affordable, signalling that the group should consider a production hike.
However, Saudi Arabia's Energy Minister Prince Abdulaziz bin Salman said that the market's recovery was far from complete.
The major players decided that it ’ s time to get barrels back in the market, which is surprising but does allow for some flexibility said Bob Yawger, director of energy futures at Mizuho.
In the meeting, Russian Vice Prime Minister Alexander Novak said he expected global oil demand to grow by 5 -- 5.5 million barrels per day this year.
OPEC has reduced output by about 7 million bpd in order to stabilize prices and reduce oversupply. In addition, Saudi Arabia made an additional 1 million bpd cuts voluntary.
OPEC has trimmed its 2013 oil demand forecast by 300,000 bpd due to renewed lockdowns.
France closed its third national lockdown and schools entered for three weeks in order to try to contain a third wave of COVID 19 infections.
Despite the new wave, strong markets have recovered most of their European losses on global manufacturing activities from pandemics.
The data from March showed growth in factory activity in the euro zone at its fastest pace in the history of the survey.
Similarly, oil found some support after Biden outlined a$ 2.3 billion spending plan to invest in traditional projects such as roads and bridges, along with addressing climate change.
But the market sentiment was tempered by an unexpected increase in the demand for unemployment benefits in the U.S. U.S. crude stocks fell unexpectedly last week, helping to support oil prices, the data of the Energy Information Administration showed.
EIA S has introduced new legislation on EIA S. The stock data showed that the situation is continuing to normalise on the U.S. oil market, said Commerzbank analyst Eugen Weinberg.