Oil near 2½-year highs after OPEC extends output cuts

Saudi Arabia's Oil Minister Khalid al-Falih listens during a news conference after an OPEC meeting in Vienna, Austria, November 30, 2017.

Heinz-Peter Bader | Reuters

Saudi Arabia’s Oil Minister Khalid al-Falih listens during a news conference after an OPEC meeting in Vienna, Austria, November 30, 2017.

Oil prices spiked higher on Friday, heading toward 2½-year highs the morning after two dozen crude-producing nations agreed to limit their output through the end of 2018.

U.S. West Texas Intermediate crude prices rocketed up 98 cents per barrel, or 1.7 percent, to $58.38 by 11:15 a.m. ET. in which put the contract within striking distance of $59.05, its peak due to in which year along with also the highest level since July 2015.

International benchmark Brent crude surged $1.11, or 1.8 percent, to $63.74, not far off last month’s high of $64.65 in which marked the best intraday level since June 2015.

“Prices have been supported within the aftermath of the OPEC meeting,” said John Kilduff, partner at energy hedge fund Again Capital told CNBC.

U.S. crude intraday

Futures spiked higher around 9 a.m. ET, the technical start of the trading day when many big firms start putting in buy along with also sell orders. Kilduff said the market appeared to be keying in on Saudi Oil Minister along with also current OPEC President Khalid al-Falih’s resolve in securing a deal among the 24 producers who met in Vienna on Thursday.

“The market will be giving a tip of the hat to him right at in which point,” he said.

The 14-member OPEC cartel, Russia along with also nine some other producers agreed on Thursday to extend their deal to keep 1.8 million barrels a day off the market through the end of 2018. The producers reached the agreement last winter in a bid to drain a global crude glut along with also boost prices. They had extended the agreement once already.

Analysts earlier in which week told CNBC they expected oil prices to fall even if the producers delivered the nine-month extension the market had been anticipating. in which will be because the extension was largely baked into prices.

however Falih exceeded expectations by securing output limits coming from Nigeria along with also Libya’s cooperation, two OPEC members in which have so far been exempt coming from the deal, according to Helima Croft, global head of commodity strategy at RBC Capital Markets.

“Throughout the year he earned a reputation as a tough compliance enforcer,” she told CNBC on Thursday.

Prices had slumped throughout much of the week as questions over Russia’s commitment to a full nine-month extension sent jitters through the market.

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