Tokyo shares open higher following OPEC production cuts agreement

Non-member Russian Federation has also agreed to participate in the deal, although the extent has yet to be specified.

In theory, cutting production would fix a glut of crude oil and gasoline in reserves that have been driving down fuel prices for almost three years.

Oil prices dropped to about $26 a barrel earlier this year after it had reached $115 some 18 months earlier. This action should raise the price of American oil, increasing production and creating jobs in New Mexico. Negotiations got bogged down in a game of poker between OPEC’s three biggest producers, Saudi Arabia, Iraq and Iran on who would do the heavy lifting.

Analysts say the deal could keep crude oil prices above US$50 a barrel. A month ago, regular unleaded sold for $2.23 a gallon.

Inventories of distillate products, which include diesel and heating oil, rose by 5 million barrels, official data showed.

It’s possible the cutback will have a lasting effect on consumers as oil is used for vehicle fuel, heating and electricity.

Crude oil prices are a major influence on the pump prices in New Zealand. The last time a barrel was priced above the US$50 mark was on October 24, when it closed at US$50.52.

Wednesday’s average price of $2.07 per gallon of regular unleaded in Bradenton-Sarasota was 4 cents higher than on Monday, according to AAA. Brent crude gained 8 percent on the European markets, trading at US$50.12 per barrel.

A weekly government report on US crude oil stockpiles had little sway in the market, which remained focused on the OPEC deal.

An improving view on global growth, led by the United States on hopes of tax cuts and federal spending under a Trump administration, rekindled the dollar’s advance toward a near 14-year peak. The cartel produces a third of the world’s oil.

European stocks also advanced on a jump in oil companies.

The oil rally ricocheted through the market, with stocks and bond prices reaction to the move. The number of active USA drilling rigs bottomed out at 404 in May and has been rising since, to just below 600 last week. The output boom could put downward pressure on prices again within nine months to a year, he said November 24.

The WTI Dec 2017 to Dec 2018 CLZ7-Z8 spread rallied to as much as negative 39 cents from negative $1.26 a barrel on Tuesday.

He added that while non-OPEC oil producers had increased their supply by 1.5 million barrels a day in 2015, the consortium now expects non-members’ oil supply to shrink by 800,000 barrels a day in 2016 – and to grow even less in 2017, at a rate of 200,000 barrels a day.