Oil trims gains, but closes higher after OPEC+ output cut decision

Oil drilling rigs

Oil closed higher today, June 5, after the 35th ministerial meeting of the OPEC+ and supported by Saudi Arabia’s decision to reduce production by an additional one million barrels per day, starting in July.

International benchmark Brent crude gained 0.8% to settle at $76.71 a barrel, after hitting an intra-day high of $78.72.

West Texas Intermediate (WTI) crude rose 0.6% to $72.15 a barrel, trimming gains from $75.06.

On June 4, OPEC and its allies (OPEC+) agreed to set a new production target at 40.46 million barrels per day (bpd) for January-December 2024, Argaam reported.

Saudi Arabia said it plans to reduce production to nine million barrels per day in July, from about 10 million barrels per day in May.

Goldman Sachs analysts commented that the production deal is bullish for oil markets and could boost Brent prices during December 2023 by between $1 and $6 a barrel, depending on how long Saudi Arabia maintains production at nine million barrels per day.

Russian Deputy Prime Minister Alexander Novak confirmed his country's extension of its voluntary reduction in oil production of 500,000 barrels per day until the end of 2024.

Fatih Birol, Director of the International Energy Agency, suggested oil prices could rise after the OPEC+ decision.