NFXStreet reports that strategists at TD Securities note that OPEC+ along with Non-OPEC+ members came to a historic agreement over the weekend to attempt to save off further collapse in the energy market.

“OPEC+ agreed to cut some 9.7m bpd through May-June, 8m bpd from July-Dec, and 6m bpd from Jan 2021-April 2022, and the cuts could well be bigger than the headline numbers as some nations' production numbers currently stand above benchmarked levels.” 

“NonOPEC+ nations will participate mainly symbolically, via market-driven cuts which could very well grow to nearly 4m bpd from countries such as the US, Canada, Brazil and Norway, and with reserve purchases via the US and also the IEA.” 

“We expect a long road to recovery, as the large Q2 surplus will translate to a large inventory overhang which will take time to work through.”

FXStreet reports that in the opinion of strategists at ANZ Bank, oil markets are expected to remain volatile as the market contemplates the new production cut agreement.

"The final 9.7mb/d cut in output is still the biggest coordinated supply agreement the market has ever seen. G20 producers also agreed to reduce output; however, they failed to set any individual targets."

"An end to the price war and this resultant supply agreement should support prices in the short-term."

"However, it fails to completely fill the hole left by the hit in demand from COVID-19. This should see prices remain depressed as inventories continue to rise in coming months."