Crude enjoys best weekly gain in years

Analysts also said that the cuts would leave the field open for other producers, especially US shale drillers.

Doubts about the historic deal were widespread in the market.

OPEC’s agreement to curb crude production for the first time in eight years will have more impact on the upstream sectors of China’s oil giants, analysts said.

International Brent crude LCOc1 was trading at $47.18 per barrel at 0707 GMT, up 80 cents, or 1.72 percent, from its last close. Brent futures also retreated from 16-month highs near $54.30 on Thursday to trade just above $53.0 p/b in the January contract.

On Thursday, Brent crude futures were trading at $54.22 a barrel at 1900 GMT – the highest level in almost 16 months, while USA benchmark, WTI crude, was trading at $41.59/Bbl.

The latest production data from the U.S. Energy Information Administration showed U.S. production increased by 9,000 barrels a day to 8.7 million barrels for the week ended November 25.

Oil is priced in dollars…and the USA currency has strengthened in recent weeks.

Brent crude’s premium to U.S crude widened to the biggest in about ten weeks.

A $5 increase in the price of a barrel of oil could result in a 13 cent hike in gas prices, according to AAA.

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

The cartel announced Wednesday, on the occasion of its biannual summit in Vienna that it would reduce production by 1.2 million barrels per day (bpd) from the 1 st January, ending a long suspense by a more ambitious agreement than the analysts had expected much.

Global surplus had pulled the prices down to $45, which is nearly 50% of its 2014 prices.

OPEC exempted key member Iran from cutting output, allowing the country to increase its crude production by 90,000 bpd to reach pre-sanction output levels of 4 million bpd. The cuts will likely trigger inventory draws in the first half of 2017, according to UBS, while Morgan Stanley says the energy industry is likely to see another wave of “notable” investments within the U.S.as well as in other regions. Russian Federation and other non-Opec producers are set to meet with Opec on December 9th.

Goldman Sachs analyst Damien Courvalin highlighted that the deal achieves a broad consensus, and that next week could potentially bring meetings between OPEC and non-OPEC members, and that could be another catalyst for the oil price.