Oil prices jump after top producers agree output cuts

Oil prices jumped more than three percent Monday after top producers agreed to cut output to shore up energy markets battered by the coronavirus pandemic and a Saudi-Russia price war.

US benchmark West Texas Intermediate was up 3.7 per cent at USD 23.62 a barrel in early Asian trade while Brent crude, the international benchmark, put on 3.1 per cent to USD 32.45 a barrel.

OPEC producers dominated by Saudi Arabia and allies led by Russia met via videoconference for an hour Sunday in a last effort to cement a deal partially struck early Friday.

It still required Mexico's assent and in a compromise reached Sunday they agreed to a cut of 9.7 million barrels per day from May, according to Mexican Energy Minister Rocio Nahle, down slightly from 10 million barrels per day envisioned earlier.

OPEC Secretary General Mohammad Barkindo called the cuts "historic".

Some analysts were sceptical, however, with AxiCorp's Stephen Innes saying that doubts remain over the deal given the collapse in demand due to the virus outbreak and the fact storage tanks were filling up.

"There remain concerns the agreement could be a day late and a 'barrel short' to prevent a decline in prices in the coming weeks as storage capacity brims," he said.