Oil price Surges as Saudis and Non-OPEC Joins Deal for Deeper Cuts - Alldamoney

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Oil price Surges as Saudis and Non-OPEC Joins Deal for Deeper Cuts

Just as non-OPEC countries, including Russia reinstated their pledge to pump less Oil next year and Saudi Arabia signaling to cut output more than the earlier agreed, price jumped to the highest since July 2015 strengthening the coordinated commitment by the world’s largest producers to tighten supply.

In New York futures rose as much as 5.8 percent and 6.6 percent in London. Khalid Al-Falih Saudi Arabia’s Energy Minister said Saturday that the biggest exporter will “cut substantially” below the target agreed last month with members of OPEC.
Non-OPEC countries brokered a deal to join forces with the group in order to trim output by 558,000 barrels a day next year, the first pact between the rivals in 15 years.
"I can tell you with absolute certainty that from Jan. 1 we’re going to cut substantially below the level that we have committed to on Nov. 30," Al-Falih said in Vienna on Saturday. The Saudi Minister further stated that the country was ready to cut below 10 million barrels a day, a level it has sustained since March 2015.

Saudi Arabia has long insisted that any cuts by the group be accompanied by action from other suppliers. Al-Falih and his Russian counterpart Alexander Novak also revealed Saturday they have been working for nearly a year on the agreement, meeting multiple times in secret. OPEC two weeks ago agreed to reduce its own production by 1.2 million barrels a day,

"The reality is both Saudi and Russia desperately need higher prices, with oil their number-one export,” said Michael McCarthy, chief market strategist at CMC Markets in Sydney. “Agile U.S. Shale producers will jump back into production on West Texas well before $60 a barrel.”

Since OPEC announced Nov. 30 it will cut production for the first time in eight years Oil has gained almost 20 percent. And leading efforts to take back control of the oil market is Saudi Arabia, which led OPEC’s decision in 2014 to pump at will.
Non-OPEC and OPEC plan excludes major producers such as the U.S., China, Canada, Norway and Brazil but includes countries that pump 60 percent of the world’s oil apart from Libya and Nigeria.

Chris Weston, chief market strategist in Melbourne at IG Ltd. Chipped in that “This is a very powerful message and that producers want to balance the market higher,”  “As a statement of intent, this is about as bullish as it gets.”

January delivery for West Texas Intermediate rose as much as $3.01 to $54.51 per barrel on the New York Mercantile Exchange, an intraday highest level since the 6th of July 2015. On Friday contract was trading at $53.71 at 8:35 a.m. Hong Kong. Prices gained 3.5 percent over the previous two sessions to close at $51.50 a barrel.
And on the London-based ICE Futures Europe exchange Brent for February settlement jumped as much as $3.56 to $57.89 a barrel. The global benchmark crude traded at a $1.96 premium to February WTI.

However, on Friday Data showed U.S. explorers rushed back to the shale patch with the largest weekly addition of oil rigs since July 2015. Rigs targeting crude in the U.S. rose by 21 to 498, according to Baker Hughes Inc, the most since January.

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