Oil prices bounce after OPEC reaffirms plan to cut output

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Oil prices rose by over 1 percent on Monday, pushed up by a statement from the producers’ club OPEC that it was committed to a deal made in September to cut output in order to prop up the market.

Brent crude LCOc1 was at $46.12 per barrel  up 54 cents, or 1.18 percent, from their previous close. U.S. West Texas Intermediate (WTI) crude CLc1 was up 61 cents, or 1.38 percent, at $44.68 a barrel.The Secretary-General of the Organization of the Petroleum Exporting Countries (OPEC) said on Monday the group was committed to a deal made in Algiers to cut output.

Despite this, many analysts doubt that OPEC’s ability to coordinate a cut:

“Skepticism about the ability for OPEC to execute on its Algiers agreement is warranted … (but) OPEC can still spook markets with its rhetoric. If prices continue to slip, the chances for bullish OPEC headlines grow, which could lift prices briefly even if there is no follow through.”

Barclays bank said there was little to no agreement among producers about who would cut how much. Monday’s price rises come after steep falls last week, when by Friday Brent fell as low as $45.08, its weakest since Aug. 11. WTI hit $43.57 on Friday, its lowest since Sept. 20.

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