While you were sleeping: Oil climbs on OPEC deal

While you were sleeping: Oil climbs on OPEC deal

Sept. 29 (BusinessDesk) - Oil prices jumped, while stocks on Wall Street rose, on a report that OPEC reached an agreement to limit output.

The Organisation of the Petroleum Exporting Countries agreed to reduce its oil output to 32.5 million barrels per day from the current production levels of around 33.24 million bpd, Reuters reported, citing two OPEC sources.

The producing group will agree concrete levels of production by each country at its next formal meeting in November, the sources said, according to Reuters.

One source also said that once production targets were reached, OPEC would reach out to non-OPEC producers for cooperation.

Crude futures jumped 4.6 percent to US$46.78 after the Reuters report.

Wall Street also gained on the report of the OPEC deal. In 2.34pm trading in New York, the Dow Jones Industrial Average climbed 0.3 percent, while the Nasdaq Composite Index climbed 0.5 percent. In 2.19pm trading, the Standard & Poor’s 500 Index rose 0.1 percent.

"The market is rewarding the show of cooperation,” John Kilduff, a partner at Again Capital, a New York hedge fund focused on energy, told Bloomberg. "Their acts haven’t matched their words so far but the market is giving them the benefit of the doubt. The desperation of Saudi Arabia to reach an agreement is readily apparent and increases the chances of success."

In the Dow, gains in shares of Exxon Mobil and those of Caterpillar, recently up 4.1 percent and 3.2 percent respectively, outweighed slides in shares of Nike and those of McDonald’s, last down 4.3 percent and 1.7 percent respectively.

Shares of Chevron also rose, trading 2.8 percent higher.

Shares of Nike dropped after the company’s future orders, a key barometer of demand for its products, fell short of analysts’ estimates.

In testimony to US lawmakers in Washington, Federal Reserve Chair Janet Yellen said the central bank expects the US jobless rate to fall further and that the current growth pace of the economy points to a gradual increase in interest rates.

In Europe, the Stoxx 600 Index finished the day with an advance of 0.7 percent, bolstered by a gain in Deutsche Bank shares. The UK’s FTSE 100 Index rose 0.6 percent, while Germany’s DAX Index gained 0.7 percent, and France’s CAC 40 Index added 0.8 percent.

Shares of Deutsche Bank rose as it agreed to sell its UK insurance unit and chief executive officer John Cryan ruled out a capital increase.

“Banks picked up following Cryan’s comments -- that helped sentiment,” Patrick Spencer, London-based vice chairman of equities at Robert W Baird, told Bloomberg. “As banking worries are slowly getting behind us, the risk-on sentiment will be back.”

(BusinessDesk)

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