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Oil prices surge nearly 10% in New York after Opec deal

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Oil prices soared nearly 10 per cent in New York on Wednesday after Opec reached a deal to cut output for the first time since 2008, putting an end to months of suspense.

[NEW YORK] Oil prices soared nearly 10 per cent in New York on Wednesday after Opec reached a deal to cut output for the first time since 2008, putting an end to months of suspense.

In New York, West Texas Intermediate light sweet crude for January delivery jumped US$4.21, or 9.3 per cent, to close at US$49.44 a barrel.

Members of the Organization of the Petroleum Exporting Countries agreed to specifics of a deal to cut production by around 4.5 per cent, or about 1.2 million barrels per day (bpd).

"It's a solid agreement," said Bob Yawger of Mizuho Securities. "That has the market in a very good mood."

A global supply glut and hopes of an Opec deal saw oil prices rally and sink over the summer. Prices continued to fluctuate after Opec members reached a preliminary agreement in September, when the details of the cuts seemed to be in doubt.

Mr Yawger said the deal announced on Wednesday had unexpected substance, imposing specific individual quotas. Russia - a non-Opec member - agreed to reduce output by 300,000 bpd, while Iran receiving permission to increase production.

"To my surprise, it's a very good deal," he said.

AFP