Oil on track for big weekly gain as OPEC+ agree output cuts


However, the group said that "in addition, several participating countries, mainly Saudi Arabia, will continue their additional voluntary contributions", meaning the overall production cut would be 2.1 million barrels per day.

OPEC met on Thursday in Vienna, deliberating policy for more than five hours.

Opec has been reining in its production for the last three years to help the oil market recover after plunging to 12-year lows in early 2016. Combined with geopolitical instability in Venezuela and Libya, tensions in the Middle East and USA sanctions on Iran, the production cuts have reduced the supply of oil and been positive for the price of the commodity.

OPEC will shoulder around two thirds of the additional cuts.

Espen Erlingsen, an analyst at Rystad Energy, said the combination of slowing growth and fast-rising oil production will put "significant pressure" on Opec to "extend and deepen production cuts if they have any hope of supporting the oil price in the near-term".

A trade war with the USA is slowing growth in China, normally an avid consumer of oil, and the European economy is barely expanding.

The additional cuts by the Organization of the Petroleum Exporting Countries and allies including Russian Federation - a grouping known as OPEC+ - will last throughout the first quarter. "It is more of a compliance maneuver and an effort to distribute the Saudi over-compliance that has been in place since about April to other OPEC+ members".

Prices have held relatively steady since the last OPEC meeting, with a barrel of Brent crude hovering around the $60 mark, apart from a spike in September sparked by attacks on Saudi oil installations.

Oil prices surged on Wednesday on expectations of deeper OPEC cuts and data showing a large drop in US crude inventories last week.

On Thursday, the state oil giant priced its IPO at the top of its price range, raising $25.6 billion and topping Alibaba's record $25 billion listing in 2014. That might change if oil and gasoline prices rise ahead of the US presidential election set for November 2020. "There was a great deal of speculation in the lead up to the meeting with some even suggesting that the Saudis were ready to reverse course and increase production given that other OPEC members were not satisfying their end of the deal".

Novak also said OPEC agreed to allow all OPEC+ members to exclude condensate from their oil output calculations, same as OPEC does with its own figures.