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Brent hits more than one-year high above $54, extending surge on OPEC output deal

01 December 2016 18:46 (UTC +04:00)

Baku-APA. Brent crude oil rose above $54 a barrel on Thursday, extending the big gains made after OPEC and Russia agreed to restrict production, even as analysts warned other producers were likely to top up supply, APA reports quoting CNBC.

The Organization of the Petroleum Exporting Countries agreed on Wednesday to its first oil output reduction since 2008 after de-facto leader Saudi Arabia accepted "a big hit" and dropped a demand that arch-rival Iran also slash output.

The deal also included the group's first coordinated action with non-OPEC member Russia in 15 years. On Thursday, Azerbaijan said it was also willing to engage in talks on cuts.

"OPEC has agreed to an historic production cut," analysts at AB Bernstein said. "The cut of 1.2 million barrels per day (bpd) was at the upper end of expectations (0.7-1.2 million bpd). An additional cut of 0.6 million bpd from non-OPEC countries could significantly add to what has been announced by OPEC."

Benchmark Brent crude for February was up $2.64, or 5.1 percent, at $54.48 a barrel by 12:13 a.m. ET (1713 GMT), after hitting its highest level since July 27, 2015. On Wednesday, the expired January Brent contract ended up 8.8 percent at $50.47.

U.S. light crude oil rose $2.32, or 4.7 percent, to $51.76 a barrel, and was approaching a 2016 high of $51.93. The contract ended Wednesday's session up 9.3 percent.

Prices remain at roughly half their mid-2014 levels, when the global glut started.

"OPEC has delivered an agreement," said Jason Gammel of U.S. investment bank Jefferies. "For the time being, oil prices have received a huge support."

The OPEC deal triggered frenzied trading, with Brent futures trading volumes for February and March, when the supply cut will start to be visible in the market, hitting record volumes.