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Oil prices surge 7% as source says OPEC has agreed to plan to cut output

Oil prices jumped as much as 8 percent on Wednesday to a five-week high as some of the world’s largest oil producers gathered in Vienna to try to agree to a production cut that could be bigger than expected.

An OPEC source said the group had agreed on a plan to cut output based on an outline hammered out in Algiers in September.

A source told Reuters that delegates were now discussing a bigger than expected cut in production of 1.4 million barrels per day (bpd).

“It does rather look as though OPEC is going to come to an agreement,” said Colin Smith, director of oil and gas research at Panmure Gordon in London

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Oil reversed most of its early losses of almost 4 percent to trade near $46 a barrel on Wednesday, as the market recovered from an initial Brexit-like reaction to Donald Trump’s surprise victory in the U.S. presidential election.

Oil analysts said while Trump’s victory raised concerns about future economic growth and oil demand, there were supportive factors for prices such as a potential shift in U.S. policy towards Iran.

“There are a lot of unknowns about what will be the Trump position in the geopolitics of the Middle East,” said Olivier Jakob, analyst at consultancy Petromatrix.

“President Obama from the start of his election worked towards a detente with Iran and we can’t be sure that President Trump will continue in the same direction.”

Trump has criticized the West’s nuclear deal with Iran, an accord that has allowed Tehran to increase crude exports sharply this year. Iran on Wednesday said Trump should stay committed to the deal.

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OPEC And The Upcoming Oil Crash: U.S. Producers Are Ready

As warned one month ago after the farcical OPEC meeting in Algiers, the cartel’s latest jawboning ploy to keep prices artificially higher – if only for one more month – is fast falling apart. Just a few hours ago, Bloomberg reporter Daniel Kruger penned the following assessment of the situation:

Production-Cut Talk Is as Good as It Gets for Oil. Some OPEC members are talking about cutting production again, and so prices are rising. Saudi Arabia and other producers both in and out of the cartel have done a good job fostering the storyline that there are terms under which parties can agree to pump less crude. Continuing signs of concord among producer nations have boosted oil prices to an average of $50 a barrel this month in New York. Yet several obstacles make it difficult for countries to commit to signing on to a deal. One obstacle is that sacrifices are needed for the agreements to succeed. Another is that those sacrifices aren’t shared equally.

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Brent crude oil steadies above $50 as investors weigh up OPEC deal

Global oil prices steadied on Monday as market players weighed last week’s news of a planned OPEC production cut with doubts over its implementation and effectiveness at wiping out a crude supply overhang.

December Brent crude futures remained above $50 a barrel in European trading but by 1400 GMT were flat on the day at $50.19 a barrel, after erasing earlier slight gains. U.S. crude futures were $48.23 a barrel, a cent lower.

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Oil rises as OPEC meets, volatility hits post-Doha high

Oil rallied on Monday as the world’s largest producers gathered in Algeria to discuss ways to support the market, with nervous trade driving volatility to its highest since exporters met in April.

Scepticism about any deal being reached has prompted money managers to cut their bullish bets to a one-month low last week, when prices fell by nearly 5 percent, dented by signs Saudi Arabia and Iran were making little progress in achieving a preliminary agreement to freeze production.

Members of the Organization of the Petroleum Exporting Countries are meeting informally on the sidelines of the International Energy Forum in Algeria from Sept. 26-28, where they will discuss a possible deal to limit output.

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Putin Pushes for Oil Freeze Deal With OPEC, Exemption for Iran

Vladimir Putin said he’d like OPEC and Russia, producers of half of the world’s oil, to reach a deal to freeze supply and expects the dispute over Iran’s participation can be resolved.

“From the viewpoint of economic sense and logic, then it would be correct to find some sort of compromise,” Putin said in an interview in Vladivostok. “I am confident that everyone understands that. We believe that this is the right decision for world energy.”

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Oil surges on possible talks between Moscow & Riyadh

Russian Energy Minister Aleksandr Novak said Russia is considering engaging in talks with Saudi Arabia on stabilizing oil prices. The possibility of a production freeze between the world’s largest producers has boosted global oil prices.

With regard to cooperation with Saudi Arabia, the dialogue between our two countries is developing in a tangible way, whether in the framework of a multi-party structure or on a bilateral level,” Novak told Saudi newspaper Asharq al-Awsat.

“We are cooperating in consultations regarding the oil market with OPEC countries and producers from outside the organization, and are determined to continue dialogue to achieve market stability,” he added.

The news helped recently slumping oil prices to rally. On Monday, North Sea benchmark Brent reached August highs of $47.61 per barrel, while US WTI crude traded above $45 a barrel.

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Forget these ‘red herrings,’ oil is heading higher: RBC’s Croft

Crude’s recent brush with levels close to $40 per barrel has made a lot of energy watchers nervous, but a top market analyst believes that international events will conspire to send oil prices sharply higher over the next several months.

Helima Croft, the global head of commodities strategy at RBC Capital Markets, identified supply talk surrounding Libya and Nigeria as two “bearish red herrings” for the oil market. Instability in both countries has sharply curtailed production in both OPEC member states, with Nigerian supply cut in half as militants target the country’s pipelines.

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100,000 oil jobs could be coming back

Good news laid-off oil workers: U.S. energy companies could soon face a serious worker shortage.

Goldman Sachs believes the American oil industry is about to stage a big comeback from the painful downturn and big job losses caused by oversupply.

As more oil fields come on line and America’s oil boom gets back on track, there simply won’t be enough people to do the required drilling, well completion and other logistical work. Cheap oil wiped out nearly 170,000 oil and gas jobs since late 2014 as desperate companies scrambled to cut costs and avoid bankruptcy.

That means just to keep up with the expected ramp-up in drilling activity, the oil and gas industry would need to add 80,000 to 100,000 jobs between now and the end of 2018, Goldman predicted in a recent report.

Read full article or watch A history of oil’s booms and busts video