NEW YORK: After major producers announced a significant production cut, crude oil prices skyrocketed. On the New York Mercantile Exchange, the West Texas Intermediate for November delivery rose 1.24 US dollars, or 1.4 percent, to settle at 87.76 dollars per barrel. On the London ICE Futures Exchange, Brent crude for December delivery gained USD 1.57, or 1.7 percent, to end at USD 93.00 per barrel.
On Wednesday, OPEC allies, often known as the Organization of the Petroleum Exporting Countries and its allies, resolved to restrict production by 2 million barrels per day beginning in November. The organisation stated in a statement that "the uncertainty that surrounds the global economic and oil market outlook" was the driving force for the decision to reduce.
Carsten Fritsch, energy analyst at Commerzbank Research, wrote in a note on Wednesday that "the production cut is OPEC+'s reaction to the dramatic price decline of recent months" and that it will contribute in rebalancing the oil market.
Oil prices fell to their lowest point since January at the end of September due to worries about demand amid rising recession concerns and the rapid strengthening of the US dollar. Traders also analysed fuel inventory data for the US. The US Energy Information Administration (EIA) reported that for the week ending September 30, the country's commercial crude oil stockpiles fell by 1.4 million barrels. S&P Global Commodity Insights surveyed analysts who predicted that US crude supplies will decline by 1.5 million barrels.
The EIA reports that while distillate fuel inventories decreased by 3.4 million barrels last week, total motor gasoline inventories fell by 4.7 million barrels.
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