Crude prices hold gains as traders await OPEC cut details

Brent for January settlement which expires on Wednesday, increased $US3.65 or 7.9 per cent

The OPEC on Wednesday chose to cut its oil output by 1.2 million barrels per day, setting the ceiling of oil production at 32.5 million barrels per day (bpd).

Non-Opec Azerbaijan and Kazakhstan have said they might also cut.

The OPEC members reached a historic agreement to cut production across the board in a history record of 8 years.

Jonan said that the only reduction Indonesia could apply was a cut of 5,000 barrel per day, which had been agreed in next year's development budget.

OPEC's first production cuts in eight years are meant to shrink the world's bloated oil stockpiles back to a normal level, paving the way for prices to rise to more than $60 a barrel.

In reaction to the news, WTI crude oil ended up 9.3 percent at $49.44 a barrel, although it went above the psychological barrier of $50 intra-day.

"OPEC has delivered an agreement", Jason Gammel of US investment bank Jefferies said.

If you were long oil early Wednesday, then you've received your Christmas gift already, but whether prices will continue to surge higher depends on multiple factors.

Brent and WTI futures had jumped more than 10 percent since Wednesday's agreement by OPEC members and Russian Federation to reduce crude production by a combined 1.5 million barrels per day.

Experts predict that the deal may soon fall apart though with Iran in particular keen to boost its oil production to pre-sanctions levels.

The oil market erupted as news emerged that OPEC states had actually reached an agreement on an output cap to back the prices.

Oil has whipsawed since a production-cut was first proposed in Algiers in September and investors speculated about whether an accord could be struck.

Brent for February settlement added as much as US$0.89, or 1.7 percent, to US$52.73 per barrel on the London-based ICE Futures Europe exchange.

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

Oil prices remain at less than half their mid-2014 levels, when the global glut started, and Goldman Sachs said in a note following the agreement that it expected oil prices to average just $55 per barrel in the first half of next year. If the group maintains agreed upon cuts, oil could trade in the $50 to $60 range, according to Morgan Stanley.

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