Oil recovers as OPEC+ countries cut production

OPEC+ is considering cutting production by more than 1 million barrels per day, causing oil prices to jump. Such a measure is designed to support prices. The 1 million bpd cut is the largest since the COVID-19 pandemic.

If an agreement is reached, it would be the group's second consecutive monthly production cut after last month's 100,000 bpd decline.

ANZ analysts indicated in their note that a cut of less than 500,000 bpd would be ignored by the market, so there is a chance of a major production cut of up to 1 million bpd.

Consulting firm FGE believes that while Brent crude prices may strengthen further in the near-term, worries about a worldwide recession are likely to limit their gains.

A note released Friday says that if OPEC+ does decide to cut production in the near term, an increase in OPEC+ reserve capacity is likely to put even more downward pressure on long-term prices.