Harry Tchilinguirian, global head of commodity markets strategy for BNP Paribas, argued that the market’s positive response to Saudi Arabia’s new production target is a sign that oil investors are “refocusing on fundamentals” such as supply instead of just responding to macroeconomic factors.

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The Organization of Petroleum Exporting Countries, along with 10 external producers like Russia, also previously agreed to cut output by a collective 1.2 million barrels per day over the first half of 2019 to further ease the global supply glut.

The market is likely to have a better sense of the “overall cohesiveness of the producer group” and the effectiveness of the cuts by the end of January, Tchilinguirian added.

For more information on the energy sector, visit our energy category.

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