Oil Jumps After OPEC Output Extension

12/01/17 06:44 AM EST
By David Hodari 

LONDON--Oil prices rose Friday after the Organization of the Petroleum Exporting Countries and other big producers including Russia agreed to keep limiting their output through the end of 2018.

Brent crude oil, the global benchmark, was up 1.1% at $63.30 a barrel in midmorning trading. On the New York Mercantile Exchange, West Texas Intermediate futures were trading up 0.7% at $57.80 a barrel.

"It's pretty much what was expected: a rollover until the end of the year. Anything more than that and they would have risked bringing on more U.S. supply, anything less and prices would have collapsed," said Thomas Pugh, commodities economist at Capital Economics.

In Vienna on Thursday, OPEC and its allies agreed to extend production cuts first agreed a year ago by a further nine months. The deal to reduce global supply by nearly 2%--in an effort to rein in a supply glut and boost prices--had been set to expire in March 2018.

Nigeria and Libya were also included in the production-cut agreement, with Nigeria limited to 1.8 million barrels a day and Libya limited to 1 million barrels a day. The overall deal will be reviewed in late June 2018.

The joint cap for Nigeria and Libya was "an easy way of getting round some awkward conversations, such as what is an appropriate level for both countries given Libya's production volatility over the past year," said Mr. Pugh.

Looking ahead, traders were expected to monitor signs of profit-taking during December, with strong global growth, supply disruptions and geopolitical tensions in the Middle East and Venezuela expected to have at least as much influence over prices as OPEC's deal.

Among refined products, Nymex reformulated gasoline blendstock--the benchmark gasoline contract--rose 0.9% to $1.75 a gallon. ICE gasoil changed hands at $556.75 a metric ton, down $0.25 from the previous settlement.

Summer Said, Benoit Faucon, and Christopher Alessi contributed to this article.

Write to David Hodari at david.hodari@wsj.com

 

(END) Dow Jones Newswires

December 01, 2017 06:44 ET (11:44 GMT)

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