Oil prices recover due to production cut, tumultuous weeks ahead

Oil prices gained on Friday as Kuwaiti oil producers said they will slash output to compensate for low demand.

Brent crude rose 2.8%, or 60 cents, at $21.93 per barrel. U.S. oil was up 4%, or 66 cents, at $17.16 per barrel. 

As the West Texas Intermediate fell into negative territory and the Brent in a twenty-year low, oil prices are suffering its worst weeks in history.

The global economy will likely drop 5.5%, as forecasted by Capital Economics. This underscored the magnitude of the damage compared to the 0.5% decline during the 2008 financial crisis.

OPEC and its allies including Russia have agreed to cut oil production by 9.7 million bpd, which will begin in May.

However, KUNA, Kuwait’s state news agency reported that the producer will begin cutting supplies to international markets before the official start of the agreed cut.