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Oil producers undertake to supply curbs, maintain price rallies

Oil is expanding a steady recovery to 2021, aided by fresh signals that the world’s largest producers will not turn on the taps and flood the market.

US crude futures recently rose above $ 50 per share. Barrel for the first time since February last year, the latest milestone in a rebound driven by an increase in travel and economic activity following the easing of coronavirus restrictions. Production cuts from major suppliers from Saudi Arabia to US companies turbocharged the advance, giving traders confidence that demand will exceed supply.

Prices have hit new highs since Saudi Arabia last week said it would unilaterally reduce production in February as part of an agreement between the Organization of the Petroleum Exporting Countries and allies such as Russia. The supply edges instilled the belief that the cartel will remain flexible with output even if the pandemic worsens and damages demand.

U.S. slate producers also indicate that they are not in a hurry to increase supply and instead plan to pay off debt and return cash to shareholders. Overall, the commitments should help the energy industry recover and highlight a recognition among manufacturers that the economic toll caused by the pandemic is far from over, say investors and industry leaders. This means that there is no need for suppliers to spend on additional output.

“I do not think the world really needs the oil at this time, so there is no great reason to grow,”

; said Richard Dealy, president and CEO of Texas oil company Pioneer Natural Resources Co. Despite the recent rise in oil prices, Pioneer still plans to reduce oil production growth to zero to 5% by 2021.

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