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Oil prices surge as OPEC+ extends production cuts

08 June 2020 12:41

SINGAPORE - Global oil prices have surged on Monday (8/6) after the Organization of the Petroleum Exporting Countries+’s (OPEC+) announced on Saturday (6/6) that production cuts will be extended to the end of July.

As reported by Reuters, Brent crude rose 2.1% to US$43.19 per barrel by 05.00 GMT (12.00 Western Indonesian time) while West Texas Intermediate (WTI) crude hiked 1.6% to US$40.17 per barrel, the highest prices since March 6, 2020 when OPEC and Russia failed to reach an agreement regarding supply cuts.

In April OPEC+ member countries agreed to slash oil supply by 9.7 million barrels per day (bpd) in May-June in response to collapsing prices due to the coronavirus (COVID-19) pandemic.

According to OCBC economist Howie Lee, both Brent and WTI will need stronger bullish factors to boost prices back to their levels before March 6.

“It’s a big gap there. You need a strong conviction to go from US$43 to pre-crash levels,” Mr Lee said.

The production cuts, he added, will result in a supply deficit by October and help prices recover in the longer run. (MS)

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