Oil surges on OPEC deal

The Organization of the Petroleum Exporting Countries (OPEC) has agreed to cut output by around 1.2 million barrels per day (bpd) to 32.5 million bpd, effective Jan. 1, for six months, Xinhua reported.

The production cut is the first since 2008. OPEC will meet again in May 2017 to consider extending the agreement for another six months.

The cut is being coordinated with non-OPEC producer Russia, which has pledged to reduce production by 300,000 barrels per day.

It is the first time since 2001 that Russia has joined OPEC in a production cut. The country has long resisted output cuts and has been pumping at record highs in recent months.

Markets rallied on the release of details of the OPEC deal.

US benchmark West Texas Intermediate (WTI) crude for January delivery jumped US$4.21 to settle at $49.44 a barrel on the New York Mercantile Exchange.

The crude futures contract surged nearly 10 percent during intraday trading, its largest one-day move since February.

Meanwhile, global benchmark Brent North Sea crude for January delivery rose $4.09 to end at $50.47 a barrel on the London ICE Futures Exchange.

Bolstered by the rising oil prices, the energy sector surged 4.82 percent, the biggest gainer among the 10 S&P 500 sectors.

Shares of energy giants Chevron Corporation and Exxon Mobil Corporation gained 2.03 percent and 1.63 percent, respectively.

The surge in oil prices also contributed to a stronger dollar. The greenback rose against other major currencies as it fueled investors views of higher inflation in the coming months. (UU.A026/A/A026/A026)

Editor: Aditia Maruli

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