OPEC countries make deal

“While OPEC’s adherence to the new allocations will be critical, the group demonstrated more cohesiveness than at any point since at least the 1.5 million barrels per day cut in2008”, said Jason Gammel of USA investment bank Jefferies in a report on Friday.

Asian equities rallied the most in three weeks after OPEC reached the deal. Now they’re positioned to ramp up output at prices that were once too low to survive on.

If the cuts are implemented in full, Opec output will fall by around 1.17mn bpd from 33.64mn bpd in October 2016 to around 32.5mn bpd in January 2017.

“The market will no longer see a sudden plunge in oil prices”, Kiwoom Securities Co market strategist Seo Sang-young said by telephone from Seoul.

Its two most important members, Saudi Arabia and Iran, are at loggerheads to such an extent they are fighting a proxy war in Yemen.

It has been a hard year for the black gold, as the prices were fluctuating in the range $44/b – $54/b. Russian Federation said it would cut production by 300,000 barrels a day, though it isn’t clear how much of that will come from already-expected declines.

USA producers are likely to be winners, analysts say.

U.S. West Texas Intermediate (WTI) futures CLc1 were at $51.06, flat with their last close.

But now, those exporting nations pour their cash back into rich economies.

Traders say the market remained broadly optimistic in the longer term about an accord created to help bring the oil market back into balance.

As prices rise, that will juice the amount of cash and investment available globally.

“The lack of firm output commitments from some non-OPEC producers may not be a major course of concern, but the threat posed by non-compliance and the potential for US shale operators to spoil the party should not be ignored”, brokerage PVM Oil Associates said.

Strength in Middle East crude benchmark Dubai may also further narrow its price gap against Brent, leading Asia refiners to buy more oil from the Atlantic Basin and the Americas, traders said.

“Most participants would say that around $60 a barrel would be a sweet spot”, says Deutsche Bank Securities analyst Ryan Todd.

Member countries at the meeting agreed on the deal where considerations of the cartel offered to Iran, Libya and Nigeria would mean that in 2017, total production might likely increase, even as other members seek to cut output in the first quarter of next year.

The average price for a gallon of regular unleaded rose 3 cents overnight in Florida to $2.15, AAA said Thursday.

US refined products also rose along with crude – ultra low sulfur diesel (ULSD) futures soared as much as 5.5 per cent to its highest in more than a year while gasoline futures jumped as much as 6 per cent. That is a price balance-point “sufficient to bring in additional revenues and potentially draw down the excessive stock overhang without significantly eroding consumer demand”.

Will prices continue to move higher?

That’s more than eight times actual daily global crude oil consumption.