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Crude oil prices rose further into the afternoon on Monday, trading at $85 for Brent crude oil around 4:30 p.m. ET, on the back of Sunday’s OPEC+ move that shocked the market.
Most analysts had assumed OPEC+ would stay the course and keep production plans steady, but a surprise decision from the group on Sunday shocked traders. The move came as a surprise to most, although in the Fall of 2020, Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman warned traders that whoever gambled on the market would be sorry.
“We will never leave this market unattended. I want the guys in the trading floors to be as jumpy as possible. I’m going to make sure whoever gambles on this market will be ouching like hell,” Abdulaziz said in Septemer 2020. At that time, Brent was falling below $40 per barrel.
While Brent crude oil was trading around $85 per barrel—a $5.10 barrel gain on the day (+6.38%) WTI was trading at $80.52 per barrel—up $4.85 per barrel (+6.41%). It is the highest price level in months for crude oil.
OPEC+ agreed on Sunday to cut production by another 1.16 million barrels per day, for a total cut of 3.66 million bpd. The White House said it was given advanced notice of the production cut plans, U.S. officials said on Monday. The Biden Administration said that it made its disagreement with the cut plans known when they were notified of the plans.
Most oil analysts have raised their price forecasts for crude oil for this year in light of the OPEC+ plans. Higher oil prices could lead to more rate hikes from the feds. Refining margins fell to the lowest level since February as crude prices rose.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.