banner

OPEC Reaches Preliminary Accord to Curb Oil Production


Asian stock markets turn lower after Wall Street gains

Canadian Natural Resources Ltd jumped 6.9 per cent to $41.17, while Suncor Energy Inc advanced 4.1 per cent to $35.58 and the overall energy group was up 5.3 per cent.

The Russian ruble also rose in price against the U.S. dollar by 1 percent, or 79 cents. As of 8:27 a.m. HK/SIN, the Aussie traded at $0.7692.

Spot gold prices fell 0.4 percent, to $1,322.35 an ounce.

At the end of six hours of negotiations and weeks of horse trading, OPEC announced the plan to cut production to a level of 32.5-33 million barrels per day (bpd) from 33.47 billion, bpd in August, the International Energy Agency (IEA) said.

“Saudi Arabia will be a willing partner in this freeze agreement”, Saudi Energy Minister Khalid al-Falih said during a briefing in Algiers, according to Bloomberg.

“With the situation we are in with crude supplies, even though we have seen draws over the last few weeks, we’re still well above five-year averages on inventories”, said Tariq Zahir, trader at Tyche Capital Advisors in NY.

It would involve each producer agreeing a strict production limit – with those to be worked out at a formal meeting in Vienna in November. “Whether they succeed or not remains to be seen”.

Equities swung between gains and losses as oil prices whipsawed amid optimism for an OPEC agreement and mixed data on stockpiles.

But this excessive production won’t last forever…

“Their acts haven’t matched their words so far but the market is giving them the benefit of the doubt”. Obviously, it went up. The agreement will be finalised when the group formally meets in November.

Louisiana’s oil patch has been suffering from low oil prices for the past few years.

Benchmark U.S. crude jumped $2.38, or 5.3 percent, to close at $47.05 a barrel in NY.

Data from the American Petroleum Institute showed crude stocks fell 752,000 barrels in the week to September 23 to 506.4 million barrels, compared with a forecast of a 2.8 million barrel build by analysts polled by Reuters.

Energy names across the region rallied sharply.

Japan’s Inpex advanced 6.60 percent, Japan Petroleum climbed 6.26 percent and Cosmo Energy was up 3.09 percent.

Shares in Germany’s troubled Deutsche Bank rose more than 2 percent in Frankfurt as the German government and the bank sought to end speculation that authorities could bail out the lender, which has a weak capital base and faces a hefty sanction from USA prosecutors in a financial crisis-related investigation.

Nike’s profit and sales were stronger than analysts expected, but the athletic apparel maker’s stock slipped $2.09, or 3.8 percent, to $53.25 as investors anxious about challenges including slower orders in North America.

The broad-based SP 500 rose 0.5 per cent to 2,171.37, while the tech-rich Nasdaq Composite gained 0.2 per cent to 5,318.55.