OPEC Target Gets Harder as African Members Boost November Output

Oil prices surged nearly 20 percent after OPEC and Russian Federation announced plans to cut production, but since then both OPEC and Russian Federation have reported record production.

"With OPEC back and effective, the forward curve for Brent in 2017 now above $50 a barrel and natural gas prices and refining margins both above year-ago levels, it does appear that the worst of the downturn has passed", analysts with Barclays wrote following the agreement.

International Brent crude oil futures LCOc1 traded at $54.64 a barrel, down by 30¢ from yesterday's prices.

Oil prices rose to fresh multi-month highs on Monday, amid hopes that an announced output cut by the Organization of the Petroleum Exporting Countries will help reduce a global supply glut and shore up prices.

Global oil prices have surged to almost $55 per barrel, following an agreement by the Organization of Petroleum Exporting Countries (OPEC) to cut production.

"While this weekend's meeting with non-OPEC producers will likely be hyped as a major breakthrough, we are maintaining an opinion that any non-OPEC production cuts will be largely of the involuntary variety", Jim Ritterbusch, president of Chicago-based energy advisory firm Ritterbusch & Associates, said in a note.

But doubts have emerged over how effective the cuts will be at reducing massive oversupply that has pressured prices lower for more than two years.

Iran's President Hassan Rouhani said on Thursday that OPEC members should work with non-OPEC nations to implement the deal reached last month, according to Iran's state TV. It hit an intra-day peak of $52.42 on Monday, the highest since July 2015. But Opec does not appear to have added Angola's 200,000 bpd production to its starting point for the overall deal. Iran will not cut, and may even boost crude production by 90,000 barrels per day as the country had been under worldwide sanctions for a long time.

"We remain skeptical that non-OPEC producers will line up to pledge their own reductions when OPEC's announcement last week already largely took responsibility for rebalancing the market", said Tim Evans, energy futures specialist with Citigroup in NY.

Crude prices boomed by nearly 9% to $49.20 per barrel as investors cheered the long-awaited deal. A fall in the U.S. greenback prompts investors to increase their stakes in dollar-denominated commodities like crude, thereby sending prices higher.

Oman, which pumps about 1 million barrels a day, has committed to matching any oil-output cut agreed by OPEC up to a maximum of 10 per cent.