Oil rallies 9% on OPEC accord to cut production finally reached, confirmed by Al-Sada
|WTI has taken off by 9% and is on the way for a break of the recent highs on the $49 handle, with minds set on the psychological $50 handle last recorded on the 25th October.
The focus to day has been on OPEC who have agreed a deal to put a limit on oil output for the first time since 2008. Saudi minister said "is a good day for the market". so, it is now official; OPEC has agreed to cut daily production by 1.2 million barrels a day to 32.5 million.
Mohammed Bin Saleh Al-Sada called the decision a “historic moment” and a “great success”. The cut will come into effect in January and that the deal was "unanimous", highlighting that Russia is committed to 300k bpd cut. As well as the 1.2 million-barrels-a-day OPEC cut, key non-OPEC producers have agreed to knock back their production by 600,000 barrels a day, with Russia taking on half of that cut. "Russia will make a statement today on cuts."
Al-Sada also said that Saudi Arabia, OPEC's king-pin, will cut production by the largest reduction at around 486,000 barrels a day.
Al-Sada also confirmed that Indonesia has asked OPEC to suspend its membership because, as a net importer of oil, they will find difficulty in participating in the deal.
OPEC will meet again on May 25th to review the deal and they may extend that deal for 6 extra months.
The 200 dma at $44.94 has been left for dist on the back of this deal, and a break of $49.00 targets $50.90 Sep 2015 highs.
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