Oil Prices Jump as OPEC Reaches Agreement to Curb Output
Oil prices jumped as much as 8 percent on Wednesday to a five-week high 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.
Brent crude futures for delivery in January were up $3.67, or 7.9 percent, at $50.05 a barrel by 11:38 a.m. ET (1638 GMT), recovering from a drop of nearly 4 percent on Tuesday and on course for their biggest one-day move in nine months. Brent crude for delivery in February was up $3.63 at $50.95 a barrel.
U.S. West Texas Intermediate (WTI) crude futures rose $3.50, or 7.7 percent, to $48.73 a barrel, a one-week high.Read that whole article by clicking here.
The Organization of the Petroleum Exporting Countries has agreed its first output limiting deal in eight years, OPEC said on Wednesday.
Reuters shares these details:
Saudi Arabia would contribute around 0.5 million bpd by reducing output to 10.06 million bpd, the source said, while Iran would freeze output at close to current levels of 3.797 million bpd and other members would also cut production.
The source added that OPEC had also suspended Indonesia from OPEC and hence the exact combined reduction was yet to be calculated. The meeting was still ongoing after around six hours of debate.
"OPEC has proved to the skeptics 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.
Before the meeting, Saudi Energy Minister Khalid al-Falih said OPEC was indeed focusing on significant cuts and hoped Russia and other non-OPEC producers would contribute a reduction of another 0.6 million bpd.Click here to read all of that article.
"It will mean that we (Saudi) take a big cut and a big hit from our current production and from our forecast for 2017," Falih said.
The Daily Caller, meanwhile, concludes that the oil war between U.S. shale producers and OPEC is over - and OPEC has lost:
The Saudi’s and OPEC thought by flooding world markets with oil, they could eliminate competition and also put oil companies in America out of business. Having done so, they would gain a larger market share and reassert their power to control global economies. There is no question that many people lost billions of dollars in this power play by the OPEC countries. The mistake that OPEC and the Saudis made, in my opinion, was the failure to understand the resolve of American oilmen. This foreign effort did shut down production, closed down a number of rigs drilling for oil, and in some cases, caused companies to go out of business. While successful in the short term, Saudi Arabia and OPEC may have paid a very high price for this war.
On Thanksgiving Day 2014, Saudi Arabia and OPEC declared war on the American oil fracking industry. I watched as on that Thanksgiving Day, the price of crude oil dropped by almost five dollars a barrel. Later that weekend the Saudi oil ministry told us that they had declared war on American oil companies. They wanted to drive these upstarts in the Dakota’s and in other parts of the country out of business. I first wrote about this attack the following week, long before anyone else was writing about this new war.
Saudi Arabia, who was the leader of this war, didn’t count on the possibility that Saudi Arabia and many of the OPEC nations would see the devastation to their own economies. The revenue loss from the reduced sale of crude oil put enormous pressure on the financial reserves of all the OPEC nations. The International Monetary Fund, IMF, said earlier this year that a drastic reduction of oil revenue could create such a significant problem for Saudi Arabia that this once mighty nation could be bankrupt by the year 2020.
Other nations in OPEC like Venezuela and Nigeria are probably already bankrupt, and the remaining members of OPEC are rapidly moving towards their own bankruptcies if oil doesn’t get above $60 a barrel. The “Independent” projected that Russia, if oil prices continued to stay low, would run out of financial reserves by the end of 2017.Click here to read that article in its entirety.
Connect with us on Facebook and Twitter!