OPEC+ extends output cuts in effort to prop up prices

OPEC+ members have opted to extend their voluntary oil production cuts through the end of June in a bid to prop up prices (CL=F, BZ=F). It was a move that was widely expected by traders.

Yahoo Finance's Ines Ferré explains the extension in the video above.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Stephanie Mikulich

Video Transcript

AKIKO FUJITA: Well, crude prices are edging higher today. This coming after OPEC Plus announced plans to extend production cuts until June. For more on this, "Yahoo Finance's" Ines Ferré joins me with what to expect.

I guess the extension was largely expected, but where do we go from here?

INES FERRE: Yeah. That's right. The extension was expected. And part of that was priced into the crude prices that you're seeing and they had been higher earlier. Right now, we are looking at prices that are down a little bit with WTI hovering around $79 a barrel.

Last Friday, they went up above $80 a barrel for the first time this year. The first time since November of last year. And Brent Crude, you're watching it at around $83 a barrel. Look, the market was anticipating that OPEC Plus was going to extend its production cuts. It will not unwind those production cuts easily, if the floor is not around $80 per barrel for Brent Crude. That's what analysts that I've spoken to have been saying.

We have been seeing some tightness in the physical markets. The near term contracts are more expensive. They're trading at a premium compared to the later months contracts. And that's called backwardation. I don't want to get too technical on you. But, basically, that means that the physical market is tight. And that's because of some of the issues that we've been seeing with the Red Sea, with refineries, and also this expectation that OPEC Plus would be extending its production cuts.

But make no mistake, we have seen an ascent really with these prices over the last couple of months, in the last two months, February and January. Gains for those months year-to-date, Brent is up more than 9%. WTI up more than 12%. And, again, going forward, the market was expecting these extension cuts. And it's going to be difficult for them to cut them, if the price is not maintained-- if the floor price isn't maintained. Akiko?

AKIKO FUJITA: OK. Ines Ferré with the very latest on OPEC Plus. Thanks so much.