Oil Price Jumps more than 3 percent on Monday after other major oil-producers agreed to reduce output. Global crude benchmark Brent for February deliveries jumped 3.66 percent to $56.33 a barrel by 10:27 a.m. on London’s ICE Futures exchange. While U.S. West Texas Intermediate future for January deliveries also surge 3.61 percent to 53.36 a barrel.
Over the weekend, non-OPEC countries including Russia agreed to reduce output by 558,000 barrels a day. The move come after the Organization of the Petroleum Exporting Countries agreed to cut oil production by 1.2 million barrels per day on Nov. 30.
What’s more, Saudi Energy Minister Khalid Al-Falih signaled that the biggest oil producer may have a deeper cut. U.S. oil futures had rose about 20 percent since the OPEC reached the deal on Nov.30.
“This signals Saudi Arabia aims to hasten the oil-market re-balancing,” said Giovanni Staunovo, an analyst at UBS Group AG in Zurich. It’s “likely to trigger oil-inventory drawdowns at the start of 2017.”
“There are too many moving parts for OPEC’s new policy to be sustainable in the long term. The strategy is bound to overshoot, in our view. leading to lower prices in the second half of next year,” Barclays said in a note on Monday.