An agreement by oil producing nations to cut output by a record amount may sustain a recent bounce in stocks, though stay-at-home restrictions and closures tied to the coronavirus pandemic continue to weigh on the global economy.
OPEC, Russia and other oil producing nations agreed on Sunday to cut output by a record 9.7 million barrels per day for May-June, representing around 10per cent of global supply, to support oil prices amid the pandemic, according to sources.The agreement, could put a floor on oil prices and provide a psychological boost for equity investors, since talks had hit roadblocks late last week. Some analysts cautioned, though, that details of the accord may already have been priced in to stock prices.
Cardillo noted that much would now depend on when governments around the world are able to lift stay-at-home orders aimed at suppressing the coronavirus. Edward Moya, senior market analyst at Oanda in New York, wrote that he would not be surprised if the agreement became a “buy the rumor, sell the news” event, though he believes it could still give some support to oil prices.