Tallahassee Journal

Oil surges on possible OPEC production cuts

Oil surges on possible OPEC production cuts

Oil prices jumped several percentage points on Thursday amid swirling speculation that the Organization of the Petroleum Exporting Countries (OPEC) is set to slash production. Brent crude oil rose 5.1% to $34.80 at 9:50 a.m., while West Texas Intermediate crude oil rose 5% to $33.91. Thursday’s gains, in addition to smaller increases in recent days, suggest that oil may have hit a trough in mid-January, when prices briefly plunged into the $20′s.http://www.dreamstime.com/royalty-free-stock-photos-oil-pump-image17680658

The Russian news agency TASS reported Thursday that OPEC and Russia could meet in Thursday to cut production, calling the likelihood of the move “very high.” But after those statements, Bloomberg reported Thursday that several OPEC delegates said there are no plans to meet, casting some doubt on whether cuts are in the works. If OPEC moves first to slash production, it would come as a surprise to analysts, who have expected less-profitable U.S. energy companies to reduce production first.

Although U.S. oil output has come down from highs posted in 2015, it’s still at historically high levels that have compounded the global surplus of oil that’s helping to keep prices low. Still, even if OPEC reduces production, macroeconomic concerns — such as the sluggish economy in China and the deteriorating situation in Brazil — are likely to continue to keep prices at low levels compared to recent yearly averages.