Earlier talks about crude production cut by OPEC and other exporters finally materialised on Tuesday, with firm oil prices that portrayed the initial signs of the production cut in a market that has been struggling for 2 years with a soaring oversupply.
This move was supported by a strong demand in Asia and a supply cut by Abu Dhabi.
According to the reports by Reuters, traders said that the market was being pressurised by investors closing financial positions that had profited from strong gains the day before. It also reported that Brent crude futures, the international benchmark for oil prices and West Texas Intermediate both flirted in the negative territory during an early European trading.
Brent crude futures were trading at $55.76 per barrel, along with U.S. West Texas Intermediate crude futures trading at a weaker point of $52.76 per barrel.
After oil markets had almost reached the same high as the mid-2015 high this week, led to the firmer Brent prices.
The Middle East-led Organisation of Petroleum Exporting Countries (OPEC) and Russian-led exporters had over the weekend reached their first deal since 2001 in order to reduce output by almost 1.8 million barrels per day to curb oversupply and prop up prices, which led to analysts saying that the announced cuts had surprised many as several OPEC members were previously reluctant to participate in the deal, reported The Indian Express.
The Indian Express also published that in a sign that the producers are acting on their plans, Abu Dhabi National Oil Company (ADNOC) has already informed their customers that it will cut crude supplies by 3-5 percent across its three export grades. This move is among the initial and visible indicators that next year, oil markets will get tighter and also ADNOC’s supply cuts should mostly be hitting Asia, even though refiners said that the cuts fell within contractual allowances within which ADNOC is able to alter agreed monthly supply volumes.
