WASHINGTON (DTN) -- Oil futures on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange settled lower Thursday in volatile trade as a deal was reached with as many as 30 oil producing countries cutting production. The deal offered no surprises and is still seen coming up short in offsetting lost demand caused by the global COVID-19 pandemic.
Reports indicate an emergency meeting by the Organization of the Petroleum Exporting Countries and their previous partners within OPEC+ led by Russia, and several other oil producing nations to address the devastating effects to global oil demand from the pandemic netted a 10 million barrels per day (bpd) production cut beginning May 1 for two months.
The size of the cut was at the market's low threshold, but the timeline was less than wanted by investors. The agreement steps down the production cut to 8 million bpd for the second half of 2020, with a 6 million bpd reduction agreed to from January 2021 through April 2022. The extension is subject to review in December 2021.
Quotas are reportedly based off an October 2018 baseline with the exception of Russia and Saudi Arabia, which will both have an 11 million bpd baseline.
Details are still emerging, and an official release has not been issued and might wait until after Friday's meeting of G-20 energy ministers, although Russia has reportedly agreed to 2 million bpd in cuts, while Saudi output would decline to 8.3 million bpd. Mexico threatened to walk out of talks late in the day, and it was not clear if there were some late meeting adjustments to country quotas.
OPEC will meet next June 10.
Markets were unimpressed, with reports earlier in the session discussing production cuts as large as 15 million to 20 million bpd. Estimates suggest global oil demand could decline by 30 million bpd in April.
NYMEX May West Texas Intermediate futures settled down $2.33 to $22.76 barrel (bbl), and ICE Brent June dropped $1.36 to settle at $31.48 bbl. NYMEX May RBOB contract ended trade little changed at $0.6773 gallon, and May ULSD May futures moved 3.81 cents lower to $0.9726 gallon.
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