Oil prices rise as OPEC+ agrees to large output cut

Oil prices climbed on Wednesday after major producers announced a big production cut.

The West Texas Intermediate for November delivery increased 1.24 U.S. dollars, or 1.4 percent, to settle at 87.76 dollars a barrel on the New York Mercantile Exchange. Brent crude for December delivery added 1.57 dollars, or 1.7 percent, to settle at 93.37 dollars a barrel on the London ICE Futures Exchange.

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Oil derricks operate in Three Rivers, Texas, the United States on Feb. 24, 2022. [Photo/Xinhua]

The Organization of the Petroleum Exporting Countries and its allies, collectively known as OPEC+, on Wednesday decided to reduce production by 2 million barrels a day starting in November.

The decision to cut stemmed from "the uncertainty that surrounds the global economic and oil market outlook," the group said in a statement.

"The production cut is OPEC+'s reaction to the marked price slide of recent months," and would help rebalance the oil market, Carsten Fritsch, energy analyst at Commerzbank Research, said Wednesday in a note.

Concerns about demand amid growing recession risks and the sharp appreciation of the U.S. dollar caused oil prices to fall at the end of September to their lowest level since January.

Traders also digested data on U.S. fuel stockpiles.

The U.S. Energy Information Administration (EIA) said that the nation's commercial crude oil inventories decreased by 1.4 million barrels during the week ending Sept. 30. Analysts polled by S&P Global Commodity Insights had expected U.S. crude supplies to show fall of 1.5 million barrels.

According to the EIA, total motor gasoline inventories decreased by 4.7 million barrels last week, while distillate fuel inventories decreased by 3.4 million barrels.