Oil prices soar as Opec, Rus­sia agree to cut out­put

The Sun (Malaysia) - - SUNBIZ -

NEW YORK: Oil prices rose more than 8% yes­ter­day as some of the world’s largest oil pro­duc­ers agreed to curb oil out­put for the first time since 2008 in a last-ditch bid to sup­port prices.

The Or­gan­i­sa­tion of Pe­tro­leum Ex­port­ing Coun­tries (Opec) agreed to cut pro­duc­tion to 32.5 mil­lion bar­rels per day (bpd), Kuwait’s oil min­is­ter said. The cuts in­clude Iraq re­duc­ing out­put by 200,000 bpd to 4.351 mil­lion bpd start­ing in Jan­uary.

Kuwait, Venezuela and Al­ge­ria have agreed to mon­i­tor com­pli­ance with the Opec agree­ment.

Non-Opec mem­ber Rus­sia has agreed to cut out­put by 300,000 bpd. Opec will meet with non-Opec pro­duc­ers on Dec. 9.

US West Texas In­ter­me­di­ate (WTI) crude fu­tures rose US$4.02 to US$49.25 a bar­rel, a 8.9% gain, by 1624 GMT. WTI briefly traded at a high of US$49.37 a bar­rel, a 9% gain.

Brent crude fu­tures rose US$3.79 to US$50.17 a bar­rel, a 8.2% jump.

A new wild card was the sus­pen­sion of In­done­sia from Opec on Tues­day, sources said. The or­gan­i­sa­tion has agreed to dis­trib­ute In­done­sia’s oil out­put share among cer­tain Opec coun­tries. In­done­sia pro­duced about 730,000 bpd in Oc­to­ber, ac­cord­ing to an Opec sur­vey from Reuters.

“I think the mar­ket is in a wait and see mode,” said John Kil­duff, a part­ner at Again Cap­i­tal in New York.

“We’re go­ing to have to see th­ese cuts truly get im­ple­mented. The pro­duc­tion trend has been higher,” he said.

“Opec has proved to the scep­tics that it is not dead. The move will speed up mar­ket re­bal­anc­ing and ero­sion of the global oil glut,” said Opec watcher Am­rita Sen from En­ergy As­pects. – Reuters

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