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Oil jumps 5% on prospects for OPEC output cut

Brent crude futures rose $2.72 on the day to $49.10 per barrel

Reuters  |  London 

Crude oil drips from a valve at an oil well operated by Venezuela's state oil company PDVSA, in the oil rich Orinoco belt, near Morichal at the state of Monagas.Photo: Reuters
Crude oil drips from a valve at an oil well operated by Venezuela's state oil company PDVSA, in the oil rich Orinoco belt, near Morichal at the state of Monagas. Photo: Reuters

Oil jumped more than 5% on Wednesday, after the Saudi Oil minister said an agreement among Organization of the Petroleum Exporting Countries (Opec) members on cutting was close, putting the price on course for its biggest one-day move since April.

Brent crude futures rose $2.72 on the day to $49.10 per barrel by 0935 GMT, while the US West Texas Intermediate (WTI) crude futures rose $2.43 to $47.66 a barrel.

The met at 0900 GMT on Wednesday at its headquarters in Vienna to discuss terms of a potential deal to cut production in an effort to prop up that have fallen by more than half since 2014 due to oversupply.

Saudi Arabia's energy minister, Khalid al-Falih, said he believed the market's fundamentals were moving in the right direction, but he believed the group was "getting close to a deal".

"The extent of the (price) move shows no one wants to miss the boat. There must be a general consensus that there will be a cut, whether it's going to be bullish, I don't know, but it's the domino effect," PVM Oil Associates analyst Tamas Varga said.

An Iraqi delegate on Wednesday said that some form of agreement would be reached, and Iran's Oil minister also said he was optimistic.

Traders said markets were jittery, and that could swing sharply in either direction depending on developments in Vienna.

Oil on Tuesday fell by nearly 4% on disputes between Saudi Arabia, Iran and Iraq regarding details of the planned cut.

Analysts at Goldman Sachs, Barclays, and ANZ agree that oil will quickly rise above $50 per barrel should come to an agreement. Without a deal, the consensus is for a fall to the low $40s.

Iran and Iraq are resisting pressure from Saudi Arabia to curtail production, making it hard for the group to reach an agreement on output.

Opec, which accounts for a third of global oil production, reached a preliminary agreement in Algiers in September to cap around 32.5-33 million barrels per day versus the current 33.64 million bpd to prop up prices.

One of Opec's biggest concerns is that by cutting it will simply cede market share to non-rivals.

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Oil jumps 5% on prospects for OPEC output cut

Brent crude futures rose $2.72 on the day to $49.10 per barrel

Brent crude futures rose $2.72 on the day to $49.10 per barrel
Oil jumped more than 5% on Wednesday, after the Saudi Oil minister said an agreement among Organization of the Petroleum Exporting Countries (Opec) members on cutting was close, putting the price on course for its biggest one-day move since April.

Brent crude futures rose $2.72 on the day to $49.10 per barrel by 0935 GMT, while the US West Texas Intermediate (WTI) crude futures rose $2.43 to $47.66 a barrel.

The met at 0900 GMT on Wednesday at its headquarters in Vienna to discuss terms of a potential deal to cut production in an effort to prop up that have fallen by more than half since 2014 due to oversupply.

Saudi Arabia's energy minister, Khalid al-Falih, said he believed the market's fundamentals were moving in the right direction, but he believed the group was "getting close to a deal".

"The extent of the (price) move shows no one wants to miss the boat. There must be a general consensus that there will be a cut, whether it's going to be bullish, I don't know, but it's the domino effect," PVM Oil Associates analyst Tamas Varga said.

An Iraqi delegate on Wednesday said that some form of agreement would be reached, and Iran's Oil minister also said he was optimistic.

Traders said markets were jittery, and that could swing sharply in either direction depending on developments in Vienna.

Oil on Tuesday fell by nearly 4% on disputes between Saudi Arabia, Iran and Iraq regarding details of the planned cut.

Analysts at Goldman Sachs, Barclays, and ANZ agree that oil will quickly rise above $50 per barrel should come to an agreement. Without a deal, the consensus is for a fall to the low $40s.

Iran and Iraq are resisting pressure from Saudi Arabia to curtail production, making it hard for the group to reach an agreement on output.

Opec, which accounts for a third of global oil production, reached a preliminary agreement in Algiers in September to cap around 32.5-33 million barrels per day versus the current 33.64 million bpd to prop up prices.

One of Opec's biggest concerns is that by cutting it will simply cede market share to non-rivals.
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Business Standard
177 22

Oil jumps 5% on prospects for OPEC output cut

Brent crude futures rose $2.72 on the day to $49.10 per barrel

Oil jumped more than 5% on Wednesday, after the Saudi Oil minister said an agreement among Organization of the Petroleum Exporting Countries (Opec) members on cutting was close, putting the price on course for its biggest one-day move since April.

Brent crude futures rose $2.72 on the day to $49.10 per barrel by 0935 GMT, while the US West Texas Intermediate (WTI) crude futures rose $2.43 to $47.66 a barrel.

The met at 0900 GMT on Wednesday at its headquarters in Vienna to discuss terms of a potential deal to cut production in an effort to prop up that have fallen by more than half since 2014 due to oversupply.

Saudi Arabia's energy minister, Khalid al-Falih, said he believed the market's fundamentals were moving in the right direction, but he believed the group was "getting close to a deal".

"The extent of the (price) move shows no one wants to miss the boat. There must be a general consensus that there will be a cut, whether it's going to be bullish, I don't know, but it's the domino effect," PVM Oil Associates analyst Tamas Varga said.

An Iraqi delegate on Wednesday said that some form of agreement would be reached, and Iran's Oil minister also said he was optimistic.

Traders said markets were jittery, and that could swing sharply in either direction depending on developments in Vienna.

Oil on Tuesday fell by nearly 4% on disputes between Saudi Arabia, Iran and Iraq regarding details of the planned cut.

Analysts at Goldman Sachs, Barclays, and ANZ agree that oil will quickly rise above $50 per barrel should come to an agreement. Without a deal, the consensus is for a fall to the low $40s.

Iran and Iraq are resisting pressure from Saudi Arabia to curtail production, making it hard for the group to reach an agreement on output.

Opec, which accounts for a third of global oil production, reached a preliminary agreement in Algiers in September to cap around 32.5-33 million barrels per day versus the current 33.64 million bpd to prop up prices.

One of Opec's biggest concerns is that by cutting it will simply cede market share to non-rivals.

image
Business Standard
177 22

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