Oil prices jump on global producer deal to cut output

Oil prices soared more than 4 percent as markets opened on Monday to the news of OPEC’s agreement with non-members to slash output in order to ease the global supply glut.

Brent crude, the leading international benchmark for oil prices, was up 4.5 percent at $56.74 per barrel (bbl) in early trading hours in the Gulf. WTI crude jumped nearly 5 percent to $54.02/bbl.

“For the time being, investors seem to have thrown aside any uncertainty, as Brent, after hovering close to $50 for seven consecutive months, broke to the upside on high volume following the OPEC deal. On a purely technical basis, oil charts point to a potential target of $60,” Gary Dugan, chief investment officer at Emirates NBD, wrote in a note.

Over the weekend, producers from outside the 13-nation cartel pledged to cut output by 558,000 bpd, starting Jan. 1, 2017 for an initial period of six months, marking the first such deal since 2001.

Oil prices have jumped by nearly 17 percent since OPEC’s Nov. 30 meeting, when the group decided to cut output by 1.2 million barrels per day (bpd) to help rebalance the market and shore up prices.

Write to Nadeshda Zareen at nadeshda.zareen@argaamplus.com