Oil prices surge more than 5% on cut pledge, US-China deal

Oil prices surge more than 5% on cut pledge, US-China deal

It is hard to say how emerging markets will react despite the economic ceasefire between Beijing and Washington and the plan to cut oil production.

On Monday, oil prices jumped as US largest online shopping day boosted stock markets and investors anticipated the upcoming meeting by the Organization of the Petroleum Exporting Countries (OPEC) to cut output worldwide.

President Vladimir Putin said that Russian Federation and OPEC biggest producer, Saudi Arabia had agreed to renew a pact on oil production cuts, as crude prices slump on global markets. However, OPEC members, alongside Russian Federation would be meeting on December 6th-7th in Austria for discussing the terms of "cut supply" to support the market and Russian Federation happened to show interest in joining OPEC.

Russia's Vladimir Putin and Saudi Arabia's Mohammed bin Salman may discuss oil supplies at the summit in Argentina. Technical teams are working on the level of the cuts necessary and the reference baseline for the reduction, he said.

While the government's move is probably welcomed by independent producers, integrated oil companies like Cenovus, Husky Energy and Imperial (which is owned by Exxon Mobil) have benefited from the low-priced of crude flowing to their refineries and driving up refining margins.

"You're going to have a ballet and concert of various statements that are either contradictory or reinforcing leading up to the OPEC meeting", said Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas in London. Last week, Alberta's government promised to buy about 80 locomotives and 7,000 rail cars to help move the crude out of the oil sands region and to market, but that won't drain the surplus supply very quickly and won't do much to get WCS prices back up.

That growing belief saw oil prices trim early falls on Friday. The January contract rose about 1% for the week.

Crude Oil prices gapped higher on Dec 2 rising more than 3%.

However, WTI prices plunged by roughly 22% in November, according to Dow Jones Market Data, after trading at a four-year high as recently as early October.

The oil reserves in the USA increased by 3.6 million barrels in the week to 23 November to 450,49 million barrels, according to the global energy Agency.

To maximize revenue, the government pumped a record 4.69 million barrels a day in October.

Putin and the prince ended years of animosity between the world's two largest oil exporters in 2016 and have worked together since then in a deal known as the OPEC+ group, that includes the cartel plus non-OPEC members such as Russia, Mexico, Azerbaijan and Kazakhstan.

Meanwhile, the number of active drilling rigs in the United States decreased by three to 1,076 in the week ending November 30.