OPEC cuts will have a muted effect on consumers

OPEC cuts will have a muted effect on consumers

Oil swept to a six-week high on Thursday after OPEC agreed to cut crude output to help clear a glut, while sterling hit a three-month peak after traders interpreted comments from a senior United Kingdom official as a crack in the government's "hard Brexit" line.

The Organization of Petroleum Exporting Countries sent crude oil prices soaring Wednesday after agreeing to its first production cuts in eight years, a deal created to drain record global oil inventories.

And 300,000 barrels, when Russian Federation is now pumping some 11 million barrels a day - the most it has achieved since the collapse of the Soviet Union - is not a meaningful reduction in any case.

"There is a real risk that higher prices could reactivate more dormant shale oil", said ANZ Research, which expects worldwide oil prices to hit strong resistance at around $60 a barrel in early 2017. The January Brent contract surged 8.8 percent to expire at $50.47 a barrel on Wednesday.

The production cut bodes extremely well for Canadian oil names-more so than their American or European counterparts.

USA shale fields could raise production within four months, said Antoine Halff, at Columbia University's Center on Global Energy Policy. Indonesia, which only returned to Opec last year after a seven-year hiatus and often bought more oil than it sold, suddenly objected.

"This will be the first time since 2008 that OPEC would be accomplishing such a feat which is expected to tackle the key challenge of low price of oil in the worldwide market which has affected the global economy with most OPEC member countries including Nigeria feeling the impact", it said.

This is the highest price per barrel registered since July 27 2015, more than 16 months ago.

The 30-year yield has climbed more than 40 basis points since the November 8 presidential election, heading back towards a 14-month peak of 3.09 percent marked last week.

As well as the USA nonfarm payrolls report, Friday brings updates on Australian retail sales and Thai foreign reserves.

Almost $1 trillion in capital investment in global oil and gas has been cut or delayed, according to Wood Mackenzie.

Futures advanced 0.5 percent in NY after rising 1.6 percent earlier. & Prod. Bear 3X Shares (DRIP) seeks to deliver -300 percent of that same index. US futures pointed to another slight decline at the open on Wall Street.

Goldman Sachs forecast an increase in prices to $55 for WTI and $56.50 for Brent, saying full compliance with output targets by OPEC and non-members could add an extra $6 a barrel.

Despite the jump in prices, they are still only at September-October levels - when plans for a cut were first announced - and prices are at less than half their mid-2014 levels, when the global glut started.

Ultimately, McTeague does expect gas prices to level out. Each OPEC member is responsible for enforcing what the cartel is calling "an allocation of oil production adjustments", instead of production quotas.

U.S. crude production rose to 8.7 million a day last week, the highest since June, according to an Energy Information Administration report Wednesday.

The deal is expected to accelerate the rebalance of supply and demand in the market, which will likely shift to a 500,000-barrel deficit in the first half of next year, Bernstein Research said. "The answer to that could well depend on what happens with the global economy in the coming year", said Simon Smith, chief economist at FXPro.

Iran had seen its oil exports fall from 2.4 million bpd in 2011 to less than 1 million bpd in 2013, and was expected to ramp back up once an agreement was reached to begin lifting sanctions.