REUTERS/ Vivek Prakash

Saudi Arabia, Russia, and key OPEC allies agreed on Thursday to slash crude oil production, a move that's expected to boost prices.

The agreement put an end to an oil-price war that's raged for weeks as the Saudis and Russians signaled production increases, diluting the resource's price per barrel.

US West Texas Intermediate crude rose as much as 12% on the news, while Brent crude gained 11% at intraday highs.

Oil erased gains and tumbled into negative territory during afternoon trading in New York as investors expressed disappointment in the degree of the production cuts.

Watch oil trade live on Markets Insider.

Oil tumbled on Thursday — erasing earlier gains of as much as 12% — as investors expressed disappointment in the degree of the production cuts agreed upon by Russia, Saudi Arabia, and OPEC+.

US West Texas Intermediate crude slid 6% to $23.39 a barrel. Brent crude, the international benchmark, fell 2.7% to $31.95 a barrel. Both saw double-digit gains wiped out as details of the accord emerged.

The agreement emerged from a virtual meeting on Thursday in which OPEC+ outlined a deal to slash production by 10 million barrels a day. That falls far short of the 35 million barrel-per-day demand decline expected in the wake of the coronavirus epidemic.

OPEC+ is also expected to seek an output reduction of 5 million barrels a day for G20 nations, Bloomberg reported. Thursday's discussions will set the pace for a Friday meeting with G20 countries including the US, another key oil-market player.

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The commodity has plummeted during the coronavirus pandemic, which has cratered global demand as flights were canceled and consumers were told to stay home. Meanwhile, OPEC+ was unable to agree on further production cuts after April 1, prompting Saudi Arabia and Russia to prepare to boost production to record levels.

That sent prices down further, with analysts and industry watchers forecasting even more pain ahead. The US Energy Information Administration this week slashed its 2020 outlook and said it would be a net importer of crude oil and petroleum for the first time since 2019 in an effort to aid talks.

Still, analysts worry that the production cuts won't be enough to significantly lift low oil prices. If it isn't, oil could fall below $20 per barrel again, RBC said.

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