WASHINGTON (DTN) -- Nearby delivery oil futures on the New York Mercantile Exchange and the Brent contract on the Intercontinental Exchange edged higher in afternoon trade Thursday. The gains followed the Organization of the Petroleum Exporting Countries and Russia-led partners agreeing to modify an existing production agreement that was set to lift output 2 million barrels per day (bpd) in January, with OPEC+ to instead boost output 500,000 bpd starting Jan. 1, 2021, while considering further adjustments to the agreement on a month-by-month basis.
Although the outcome of this week's negotiations came up short of market expectations, traders seemed to breathe a sigh of relief as the producers reached a consensus, including satisfying members who were eager to open the spigots. The group was due to relax supply reductions to 5.8 million bpd from the current 7.7 million bpd at the start of 2021 through the end of April 2022. Furthermore, participating countries agreed to hold monthly OPEC and non-OPEC ministerial meetings to assess market conditions and decide on further production adjustments, either increases or reductions, for the following month not to exceed 500,000 bpd each month.
Should the group continue to raise output as planned, they would reach a 2 million bpd production increase by the end of April 2021 -- the timeline forecast for Western nations to reach a 50% vaccination target.
In a news conference following the meeting's conclusion, Saudi Arabia oil minister Prince Abdul-Aziz Bin-Salman said the markets should take comfort that OPEC+ is being careful amid an uncertain demand outlook this winter. The group also agreed to give until March 2021 for laggard members to make up for their missed quotas. Russia, Iraq and Nigeria among others have produced above their quotas for at least last three months, prompting United Arab Emirates to demand stricter compliance with pledged quotas. Russia, for instance, pumped nearly 10 million bpd in October and November, well above its pledged target of 8.99 million bpd under the terms of the deal.
Further supporting oil prices, top lawmakers on Capitol Hill are inching closer on a stimulus deal for individuals and businesses hard hit by COVID-19 induced job and business losses. House Speaker Nancy Pelosi and Senate Majority Leader Mitch McConnell held discussions Thursday afternoon, with the congressional leaders saying they're committed to reaching an agreement.
Talks in Washington are taking place as some states are reclosing businesses and reimposing mobility restrictions to slow the spread of the coronavirus, with new infections continuing to climb to fresh record highs. The Department of Labor Thursday morning reported a 75,000 decline in initial unemployment claims filings for the week ended Nov. 28, but to a stubbornly high 712,000. The Labor Department will release its nonfarm payroll report Friday morning that is expected to show 500,000 new jobs were created in November, down 138,000 from October.
On the session, NYMEX January West Texas Intermediate crude futures gained 36 cents to settle at $45.64 per bbl and ICE February Brent futures added 46 cents to $48.71 per bbl. NYMEX January ULSD futures advanced more than 2 cents to finish at $1.3933 gallon, while the January RBOB contract gained 2.71 cents to $1.3933 gallon.
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