COM - Crude oil surges more than $5/bbl after surprise OPEC+ production cut

2023-04-02 19:53:15 ET

Crude oil prices jumped more than $5/bbl as trading opened, responding to Sunday's surprise oil production cut across several OPEC+ nations.

U.S. WTI crude ( CL1:COM ) surged past $81/bbl at the open to its highest since late January, with the May contract recently +6.8% at $80.81/bbl, while June Brent crude ( CO1:COM ) opened at its best level in nearly a month at the open at ~$85.50/bbl before easing a bit to $85.29, +6.7% .

Production cuts totaling ~1.16M bbl/day will start in May and last until the end of 2023, led by Saudi Arabia's ~500K bbl/day reduction, a 211K bbl/day cut by Iraq, 144K bbl/day by United Arab Emirates, 128K bbl/day from Kuwait.

Russia said it would extend its 500K bbl/day cut started in February until the end of the year.

ETFs: ( NYSEARCA: USO ), ( BNO ), ( UCO ), ( DBO ), ( SCO ), ( USL ), ( DRIP ), ( GUSH ), ( USOI ), ( NRGU ), ( XLE ), ( XOP ), ( VDE ), ( OIH )

Goldman Sachs lowered its year-end 2023 OPEC+ production forecast by 1.1M bbl/day and raised its Brent price forecasts for 2023 by $5/bbl to $95 and by $3/bbl to $100 for 2024.

“OPEC+ has very significant pricing power relative to the past, and today's surprise cut is consistent with their new doctrine to act pre-emptively," the bank said. "While surprising, this cut reflects important economic and likely political considerations."

The OPEC cuts overshadowed an agreement between Iraq's government and the semi-autonomous Kurdistan region to resume oil exports through Turkey this week; the supply disruption had helped WTI crude rally more than 9% last week .

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