Oil prices achieved massive gains of over 4 percent on Thursday, due to a surprise move by the Organization of the Petroleum Countries (OPEC) to maintain current levels of output instead of easing restrictions, as had been widely predicted.
Despite forecasts that OPEC would increase output by about 500,000 barrels per day (bpd) because of rapidly strengthening demand, the cartel and its allies in its highly-anticipated Thursday meeting agreed to keep production unchanged into April, in the spirit of not upsetting demand's upward trajectory.
Also, OPEC's leader Saudi Arabia said it would extend its voluntary oil output cut of 1 million bpd and decide in coming months when to gradually phase it out.
Darren Woods, CEO, Exxon
We're going to continue to return cash to shareholders through a very strong dividend
As a result, Brent rose $2.67, or 4.2 percent, to settle at $66.74 per barrel, and West Texas Intermediate ended $2.55, or 4.2 percent, higher at $63.83.
Bart Melek, head of commodity strategies at TD Securities, said, "The message OPEC is sending market is they're quite willing to see oil prices run hot and ultimately, go a long way in reducing the inventory overhang built last year because of COVID-19."
But Bjornar Tonhaugen, head of oil markets at Rystad Energy, warned, "There is one thorn to the bullish cocktail though and very few are surprised: Russia wants to boost output," noting that Russia was allowed to raise output by 130,000 bpd in April and Kazakhstan by another 20,000 bpd.
Tonhaugen added, "With such price levels, which are now boosted even more after the news of a possible rollover consensus, the U.S. can comfortably increase production, even from costly break-even projects."
For his part, Alexander Novak, deputy prime minister of the former Soviet Union, said on Thursday that while global oil markets have not fully recovered from the pandemic but are in better shape now than last year.
Other news on Thursday supported the overall bullish sentiment for crude as the Covid vaccines continue to result in lowering infection and death rates around the world: Mike Henry, CEO of commodities giant BHP, told media "We are seeing global growth for this year as being slightly stronger than we were expecting six months ago."
In a similarly upbeat mood, Darren Woods, CEO of Exxon, reported that his company's current yield of 6.2 percent is among the highest in the S&P 500, making it an attractive bet for income-seeking investors, and he said, "We're going to continue to return cash to shareholders through a very strong dividend."