WTI prices elevated on OPEC+ accord and production cuts
- Oil prices were elevated on Friday following the confirmation of OPEC+ accord.
- NFP and trade deal headlines were positive for risk and supportive of oil prices.
The price of a barrel of oil shot higher on Friday with West Texas Intermediate spot reaching as high as $59.81 from a low of $57.68.
The Organization of the Petroleum Exporting Countries and its allies, (OPEC+) finally agreed to cut production by 500,000 barrels per day on top of its current reduction agreement which will start in in the beginning in January, bringing total cuts to 1.7billion barrels a day.
"Ultimately, this is synonymous with an attempt to distribute Saudi's over-compliance, but does not materially change the group's total output. We suspect that hopes that the cartel would deepen their output curtailment will be pared back in the coming days. Hence, we continue to expect WTI and Brent prices to revert lower in the coming days," analysts at TD Securities explained.
US data surprise data supports risk appetite
Meanwhile, the strong US Nonfarm Payrolls was positive for risk and a bullish addition for oil prices. The headline rose 266k in November, surging past expectations by a huge 86k margin with October revised by +28k. Additionally, the unemployment rate fell from 3.6% to 3.5%, underemployment fell from 7.0% to 6.9%, although the participation fell from 63.3% to 63.2%, albeit within the upward trend. Hourly earnings rose 0.2%mth, 3.1% YoY. subsequently, US stocks lifted the benchmarks into a positive close, correlating with oil prices, with S&P index +0.91, NASDAQ index +1.0% and the Dow industrial average +1.22%.
Sino/US trade deal on track
On Friday, there was news that the state-run Xinhua News Agency said that China’s State Council began the process of exempting some soybeans and pork imported from the US from punitive tariffs, also helping to boost sentiment on Friday and underpinning the recent confirmation from Beijing that indeed a 'phase-one' deal is "on track".
WTI levels