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OPEC reach deal sending Oil, dollar, energy shares and bond yields higher - Alldamoney

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OPEC reach deal sending Oil, dollar, energy shares and bond yields higher

OPEC deal will cut output and help price recover 

NEW YORK -   (DA MONEY) The Organization of the Petroleum Exporting Countries, OPEC on Wednesday agreed to its first output cut since 2008 sending Oil prices, and energy shares higher on Thursday morning. OPEC’s crude oil output cut will decrease the oil glut witnessed in the market over the past years. The news caused dollar and bond yields rise sharply on the view that expected inflationary pressures will bring higher interest rates.

Inaction by the oil cartel saw global oil prices fall by more than half in the last two years, the deal for the first time in 15 years will see non-OPEC Russia joining in the decision to reduce output.
According to  Opec's president Mohammed Bin Saleh Al-Sada, non-OPEC countries will reduce production by 600,000 barrels a day without listing the countries beyond saying Russia will cut 300,000 barrels from its output which runs up to 10 million barrels per day.
"This agreement comes from a sense of responsibility from OPEC member countries and non-OPEC member countries for the general well-being and health of the world economy," he stated.

Even though disagreements between Saudi Arabia - the world's biggest oil producer - and Iran led to doubts an agreement would be secured. The consensus was that there would be some sort of loose agreement from the organization to keep oil supported, but what we got on Wednesday was the real meat on the bone.

On the break of the news U.S. Crude oil (CLc1) soared more than 9 percent to a one-month high of $49.38 a barrel. The contracts were a fraction lower at $49.42 a barrel early on Thursday. Brent crude (LCOc1) was just below $52.00 a barrel after holding to a six-week peak of $52.37.
Expected inflation in the United States, which is already high on the president-elect Donald Trump’s campaign promises to adopt reflationary policies using a large fiscal stimulus rose.
Treasuries resumed their rout in the U.S, seeing prices sliding and yields spiking, to send the dollar higher against its peers. The 30-year yield on bonds, which are more sensitive to inflation, climbed about 9 basis points to 2.39 percent overnight eroding their value, thereby bring it back to its 14-month peaks marked the week before.

Analysts think the deal was liable, on agreement from non-OPEC members as John Chairman of Alfa Energy Group in London. Said."Without their agreement it is technically unworkable, so there is still some uncertainty hanging over it,".

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