OPEC+ teaches us that demand curves are downward sloping

From the NYTimes (In Surprise, OPEC Plus Announces Cut in Oil Production):

Saudi Arabia, Russia and their oil-producing allies announced on Sunday that they would cut production by more than 1.2 million barrels of crude a day, or more than 1 percent of world supplies, in an apparent effort to increase prices.

Oil prices soared as markets opened Sunday evening, with both the American and global oil benchmark prices rising by 7 percent. …

“I really am surprised,” said Tom Kloza, the global head of energy analysis at the Oil Price Information Service. Mr. Kloza said he expected that the Brent global oil price benchmark, which has been hovering at $75 to $80 a barrel in recent weeks, would climb above $80. On Sunday evening, the price of Brent crude surged to $85.48 a barrel. West Texas Intermediate, the American benchmark, rose to $81.04.

Various energy experts estimated the eventual cut differently. Helima Croft, head of global commodity strategy at RBC Capital Markets, said that the voluntary cuts on paper amounted to more than 1.6 million barrels a day but, she added, the “real effect could be around 700,000 barrels a day.”

The global oil market is roughly 102 million barrels a day.

What more can you ask from a Monday?

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