SINGAPORE, Sept 29, (APP/AFP) Oil prices surged
Thursday after the OPEC producers’ group surprised the market with a deal to slash output.
At the end of six hours of negotiations and weeks of horse trading, OPEC announced the plan to cut production to a level of 32.5 33 million barrels per day (bpd) from 33.47 billion, bpd in August, the International Energy Agency (IEA) said.
The informal meeting was held on the sidelines of an IEA meeting in a bid to stabilise prices that have been battered by a stubborn supply glut since 2014.
Oil prices soared by as much as six percent following the news and extended gains in Asian trade on Thursday although at a slower pace.
At around 0100 GMT, US benchmark West Texas Intermediate (WTI) for delivery in November was up 23 cents to $47.29 and Brent crude for November added 22 cents to $48.91 a barrel.
The decision to cut output caught the market offguard.
Market watchers had been pessimistic about a cut or a freeze after similar efforts fell apart in April due to disagreements between OPEC majors Saudi Arabia and Iran.
Angus Nicholson, a Melbourne based analyst with IG Markets said the OPEC decision was the main impetus for the price surge but said details of the deal “sound a bit fuzzy at the moment”.
“There is the possibility that OPEC managed to commit to a weak deal at this meeting that may pave the way for a more comprehensive production cut at the November meeting,” he said in a note, referring to OPEC’s formal meeting on November 30.