Oil price rally pauses as markets take stock of OPEC deal

“Russia has already publicly indicated it is ready to cut production in the first half of 2017 by up to 300 thousand barrels of oil per day (mbpd), although it is not completely clear from which level production will be cut”, the agency said.

The other force that could limit oil’s rise is the wall of American shale oil just waiting to be pumped now that prices are higher.

The agreement has sparked a two-day rally in oil of about 12 percent to above $50.

Two months ago in Algiers an agreement was outlined based on which the OPEC and non-members were obliged to cut their productions in order to stabilize the market. “For the time being, oil prices have received a huge support”.

Al-Sada said the OPEC cutback is to take effect January 1, with consultations planned on the exact timing of the non-OPEC reductions.

Effectively, what OPEC and Russian Federation are planning is to take their joint output back to the level that prevailed in January this year, begging the question as to whether this will indeed be enough to spark a sustained rally in prices.

Don’t blink. You might miss another jump in oil prices.

The good news for drivers is prices at the pump remain low, at least so far.

He said: “As the history of OPEC has shown and as many of our predecessors will no doubt acknowledge, the road to success is not always easy to navigate”. But if gasoline spikes to $4, “that could be bad”.

Certainly, initial market reaction suggests that investors are expecting a substantial tightening of the supply-demand balance, with U.S. West Texas Intermediate crude futures settling up $4.21 at $49.44 a barrel, a 9.6 percent gain.

At the end of the day, the US oil boom has fared much better than feared when OPEC launched the price war two years ago.

Oil stocks climbed after OPEC nations, which collectively produce more than one-third of the world’s oil, agreed to trim production for the first time in eight years.

Nigeria was recommended for exemption to enable it recover from the negative impact of incessant attacks on its oil facilities by armed militant groups in the Niger Delta region, which resulted in a massive cut in its production and exports capacities. A stronger-than-expected USA manufacturing reading for November and a rise in US construction spending in October also boosted yields. Bond prices fell sharply yet again and the 10-year note’s yield rose to 2.38 percent from 2.29 percent on Tuesday, a major move for that market.

The U.S. put three more oil rigs back to work in the latest week, bringing total active rigs to 477, the most since late January, according to Baker Hughes.

CNPC and Sinopec, according to Wang, focus more on downstream oil and gas sectors, including refining and marketing, which gives them an edge when the oil price is low.

Research firm IHS Inc. estimates that if crude rises to $55, USA production will instead grow by about 500,000 barrels a day — offsetting almost half of OPEC’s stated cut.