Iraq prime minister says his country will cut oil production

The group is expected to reassess the effectiveness of the deal in six months.

Iraq, which had insisted on higher output quotas to fund its fight against Islamic State militants, unexpectedly agreed to reduce production – by 0.2 million bpd.

“The reflation trade continues to work in earnest, this time Trump has taken a back seat and OPEC and Russian Federation have taken the initiative and lit the fuse under the oil price“, wrote Chris Weston, chief market strategist at IG in Melbourne. “If there is a deal, the question for markets will be whether it is a strong deal or a weak deal and this will be determined by the level of detail announced by OPEC”, as quoted by Market Watch. The crude futures rose about ten percent in intraday trading, the largest one-day move since February.

Brent crude futures for January delivery settled up 8.8 percent at US$50.47 a barrel.

Speculators piled into crude oil options and futures in the days ahead of the OPEC meeting.

Oil prices are set by the barrel.

CURRENCIES: The dollar fell to 114.27 yen from 114.44 yen.

Brent’s recent high in October was $53.70, and movement above that point would signal that a further rally is possible, said Fawad Razaqzada, a market analyst at forex.com.

That, along with the risk of profiteers outside the agreement producing their own oil to throw into the mix, should keep your price at the pump at an acceptable rate – hopefully.

Canada’s economy accelerated in the third quarter at its fastest pace in more than two years, benefiting from a rebound in oil exports and continued consumer spending, data from Statistics Canada showed.

Also, because any cut will only take effect from next year, supplies for the rest of 2016 remain ample.

Oil prices had fallen to near 13-year lows of below $30 a barrel in February from peaks of more than $100 in June 2014 largely due to an oversupplied market outpacing demand. The organization said the reduction is needed to address the serious problems of imbalance and volatility coming mainly from the supply side.

Cnooc Ltd. capped its best gain in more than seven months in Hong Kong after oil prices surged on the Organization of Petroleum Exporting Countries’ agreement to curb production for the first time in eight years.

However, analysts are cautiously optimistic about oil price advances as the strength of the deal depends on whether all participants can keep their promises.

Morgan Stanley said Monday that an Opec agreement could boost crude prices by US$5 or more.

According to a report on U.S. crude oil production from the U.S. Energy Information Administration, domestic output is forecast to average 8.8 million barrels per day in 2016, lower than 2015’s average of 9.4 million barrels per day and roughly equal to the agency's 2017 forecast of 8.7 million barrels per day.