Oil prices fell 1.5 percent to steady at around $53 a barrel on Friday after the biggest weekly rally since 2009 following OPEC's decision this week to cut crude output in order to rein in a global glut.
Russia plans to use its post-Soviet era record high November oil production as its baseline when it cuts output under this week's deal with OPEC, Deputy Energy Minister Kirill Molodtsov said on Friday.
While the crude oil market grabbed the spotlight this week, considering the historic OPEC agreement and rightly so, we also must keep an eye on natural gas. The natural gas market has had an impressive move as of late and yesterday’s price spike got help not only from a slightly friendly supply report, but a weather prediction that made news and was front and center today.
On Wednesday OPEC defied sceptics by telling the world we’re still united. When many thought that OPEC had no more influence on oil prices, yesterday they proved them wrong with Brent prices surging by 9% to trade above $50 per barrel. For the first time since 2008 the cartel members managed to put their political conflicts aside and strike a deal that benefits their economic agenda by reducing output 1.2 million barrels a day starting January 2017 for six months.
The OPEC put its differences to a side and got its act together to resume its traditional role as a price fixer on Wednesday. The cartel agreed to cut its oil output by a good 1.2 million barrels per day to 32.5 million bpd. The agreement is subject to key non-OPEC members reducing their own output by 600 thousand barrels per day, half of which will be taken care of by Russia. The changes will take effect from the first day of next year.
This is a big OPEC’ing deal. While the naysayers said it could not be done, OPEC went ahead and did it anyway. The cartel agreed to cut production by 1.2 million barrels a day(mbd) to 32.5 mbd and has enticed non-OPEC producers to add another 600,000 barrels. Now that the months in making the deal is done, what does this mean for oil as well as the outside market.
WTI Crude staged a savage rebound during trading on Wednesday with prices clipping $49 following the shocking OPEC production cut deal which eased some concerns over the excessive oversupply in the markets.