Oil soars 6% as OPEC reaches deal to limit output in November

Oil soars 6% as OPEC reaches deal to limit output in November
OPEC logo is pictured ahead of an informal meeting between members of the Organization of the Petroleum Exporting Countries (OPEC) in Algeria. (Reuters)
Updated 28 September 2016

Oil soars 6% as OPEC reaches deal to limit output in November

Oil soars 6% as OPEC reaches deal to limit output in November

NEW YORK: Oil prices jumped as much as 6 percent on Wednesday after OPEC sources said the group has reached a deal to limit crude output at its policy meeting in November, a source for the producer group said.
Brent crude was up $2.76, or 6 percent, at $48.73 a barrel by 1820 GMT, after reaching a more than two-week high of $48.96.
US West Texas Intermediate (WTI) crude rose by $2.35, or 5.4 percent, to $47.02, peaking at $47.45, its highest since Sept 8.
The Organization of the Petroleum Exporting Countries has agreed to limit production to 32.5 million barrels per day, OPEC sources said after talks held by the group on the sidelines of the Sept. 26-28 International Energy Forum in Algiers. The latest production figure for the group is 33.24 million bpd.
After reaching that target, OPEC will seek support from non-member oil producers to further ease the global glut, the sources said.
“This was unexpected for sure ... no one that I know of saw it coming. The market doesn’t seem positioned for it. The fundamentals in the US are already tighter than we expected and is due to get tighter,” said Scott Shelton, energy broker and commodities specialist for ICAP in Durham, North Carolina.
Energy Minister Khalid Al-Falih said earlier that Iran, Nigeria and Libya would be allowed to produce “at maximum levels that make sense” as part of any output limits which could be set as early as the next OPEC meeting in November.
That represents a strategy shift for Riyadh, which has said it would reduce output to ease a global glut only if every other OPEC and non-OPEC producer followed suit.
Iran has argued it should be exempt from such limits as its production recovers after the lifting of EU sanctions earlier this year.