Oil prices resumed their rise Thursday and held above the
$50 barrier following OPEC’s decision to carry out its first output cut
in eight years.
The Organization of the Petroleum Exporting Countries at a
meeting in Vienna on Wednesday agreed on specific targets to enact a
preliminary deal struck in September designed to ease a global crude
supply glut and boost prices.
Many analysts had expected the producers’ cartel to fail to
reach a deal as major players like Iran, Iraq and Saudi Arabia remained
divided ahead of the meeting.
Crude futures prices surged more than 10 percent immediately after the OPEC deal.
At 0630 GMT Thursday, after a brief dip in early Asian
trade, US benchmark West Texas Intermediate for January delivery was up
70 cents or 1.42 percent at $50.14, while Brent crude for February was
81 cents or 1.6 percent higher at $52.65.
“Not only had hopes of higher prices been realised, the
reputation of the OPEC has also been salvaged, prompting the surge,”
said Jingyi Pan, market strategist at IG in Singapore.
“Sceptics have now placed their focus on the implementation
of the OPEC deal where Saudi Arabia will be shouldering the bulk of the
cut.”
The 14-member OPEC agreed to lower its monthly output by 1.2 million barrels per day (bpd) to 32.5 million bpd from January 1.
Qatar’s Energy Minister Mohammed Bin Saleh Al-Sada said
non-member Russia committed to reducing its output by 300,000 bpd, half
of a hoped-for 600,000 bpd reduction from outside the organisation.
Prices had fallen to near 13-year lows of below $30 a barrel
in February from peaks of more than $100 in June 2014 largely due to an
oversupplied market outpacing demand.
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