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Oil resumes rise after OPEC cut

Oil resumes rise after OPEC cut

It is highly likely that Russian Federation and other members will take part in the production deal, as Russian Federation was the key player behind the OPEC output cut.

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. "In general, there is an understanding that this (cut) should be equal in percents for all", Novak said.

"It's clearly too soon to know what beyond the short-term market gain will be the consequences of this mini-renaissance of OPEC - for other producers and for the group itself", Credit Suisse analysts said. Rosneft and Gazprom Neft declined to comment, while Lukoil and Surgut did reply to Reuters requests seeking a comment.

Russia, which is not an OPEC member, also agreed to slightly reduce its oil production. Traders viewed the deal as a serious effort by OPEC to rebalance the oversupplied oil market and there are opportunities for investors, especially in the S&P 500 energy sector, Jefferies said.

Indonesia's Energy and Mineral Resources Minister Ignasius Jonan, who attended the Vienna meeting, said the only reduction Indonesia could accept was a cut of 5,000 bpd, which had been approved in the country's 2017 budget.

"Crude prices boomed by nearly 9% to $49.20 per barrel as investors cheered the long-awaited deal".

"Unlike in the past OPEC decisions, if prices move to around US$60, a substantial amount of oil in United states is ready to come to the markets", Birol said.

The recovery in crude oil prices since early 2016 led to the rise in USA drilling activity and U.S. crude oil production.

"For now speculators have taken this as a positive and have upped the price for both oil and gasoline on the future markets". Its readmission past year received surprise, signalling to some that Opec had abandoned its role as a defender of oil prices.

Oil prices rose 9% in the wake of the news, with the January contract climbing $4.21 at US$49.44 per barrel.

For the economy as a whole, the U.S. Labor Department said first-time claims for unemployment for the week ending November 26 increased 17,000 and the less volatile four-week moving average gained 500 from the previous estimate.

The effect of the President-elect's pledges, such as easing federal restriction on oil drilling, which could add an oil glut to the market, may become clearer in the second half of next year.

But significant risk remains that OPEC members will produce crude above quotas, as has happened in the past.