Oil prices rose Friday after the Organization of the Petroleum Exporting Countries and other big producers including Russia agreed to keep limiting their output through the end of 2018.
Brent crude oil, the global benchmark, was up 1.1% at $63.30 a barrel in midmorning trading. On the New York Mercantile Exchange, West Texas Intermediate futures were trading up 0.7% at $57.80 a barrel.
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"It's pretty much what was expected: a rollover until the end of the year. Anything more than that and they would have risked bringing on more U.S. supply, anything less and prices would have collapsed," said Thomas Pugh, commodities economist at Capital Economics.
In Vienna on Thursday, OPEC and its allies agreed to extend production cuts first agreed a year ago by a further nine months. The deal to reduce global supply by nearly 2%--in an effort to rein in a supply glut and boost prices--had been set to expire in March 2018.
Nigeria and Libya were also included in the production-cut agreement, with Nigeria limited to 1.8 million barrels a day and Libya limited to 1 million barrels a day. The overall deal will be reviewed in late June 2018.
The joint cap for Nigeria and Libya was "an easy way of getting round some awkward conversations, such as what is an appropriate level for both countries given Libya's production volatility over the past year," said Mr. Pugh.
Looking ahead, traders were expected to monitor signs of profit-taking during December, with strong global growth, supply disruptions and geopolitical tensions in the Middle East and Venezuela expected to have at least as much influence over prices as OPEC's deal.
Among refined products, Nymex reformulated gasoline blendstock--the benchmark gasoline contract--rose 0.9% to $1.75 a gallon. ICE gasoil changed hands at $556.75 a metric ton, down $0.25 from the previous settlement.
Summer Said, Benoit Faucon, and Christopher Alessi contributed to this article.
Write to David Hodari at firstname.lastname@example.org @wsj.com>
Oil prices rose Friday after the Organization of the Petroleum Exporting Countries and other big producers agreed to continue limiting their output for an additional nine months, raising hopes that oil prices will continue to climb out from a three-year slump.
U.S. crude futures rose 96 cents, or 1.67%, to $58.36 a barrel on the New York Mercantile Exchange -- their second highest settlement of the year. Brent, the global benchmark, rose $1.10, or 1.76%, to $63.73 a barrel on ICE Futures Europe.
In Vienna on Thursday, OPEC and its allies, a coalition of other major producers led by Russia, agreed to continue holding oil off the market through the end of 2018. The group first agreed a year ago to reduce global supply by nearly 2% in an effort to rein in a supply glut that has weighed on the market since 2014. The accord had been set to expire in March.
The extension was widely anticipated, and the market's reaction has been tepid compared with a year ago, when the initial announcement of production cuts pushed prices up about 9%.
"It's pretty much what was expected: a rollover until the end of the year," said Thomas Pugh, commodities economist at Capital Economics. "Anything more than that and they would have risked bringing on more U.S. supply, anything less and prices would have collapsed."
Sentiment in the oil market has shifted dramatically in recent months, and oil prices have climbed to their highest levels since 2015.
When the deal was first announced in 2016, many were skeptical that it would bring a meaningful supply reduction, pointing to OPEC members' history of cheating and exceeding production quotas. Many feared that even if higher prices materialized, they would just spur an onslaught of production from U.S. shale producers, thwarting OPEC's efforts.
Investors remained doubtful for much of the year: between February and June, oil prices tumbled more than 20%.
But compliance with the deal has been stronger than many expected. At the same time, global economic growth has lifted demand and escalating tensions in the Middle East that have raised the prospect of supply disruptions. The price of oil for delivery in the near future has risen above prices further out, which indicates that the market has tightened and discourages market participants from socking more oil away and allowing the glut to rebuild.
"OPEC's decision comes against a backdrop of an oil market that has already rebalanced," analysts at Morgan Stanley said.
Investors have become more confident that the restraint by OPEC and its allies is helping to keep prices at a level that both energy companies and producing nations can live with.
"I think that even just stabilizing Brent between $60 and $65 bodes well for the global economy, bodes well for the producing companies, and it does sound a little like a goldilocks scenario," said Nicholas Koutsoftas, a portfolio manager at Cohen & Steers.
But the prospect that U.S. producers will flood the market with crude continues to linger over the market. Saudi Energy Minister Khalid al-Falih described shale growth this year as manageable and moderate, and said he expects 2018 to be similar.
Some analysts say that the Saudis have underestimated shale's threat. U.S. oil production jumped by 290,000 barrels a day in September -- an increase of 3% from August -- a sign that companies were quick to respond when U.S. prices climbed back above $50 a barrel.
"We think that Khalid al-Falih's comments today suggest he may misunderstand what U.S. producers are capable of at current price levels, " Barclays analysts wrote in a note late Thursday.
Gasoline futures rose 1.16 cents, or 0.67%, to $1.7416 a gallon Friday. Diesel futures rose 4.37 cents, or 2.3%, to $1.9413 a gallon.
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(END) Dow Jones Newswires
December 01, 2017 17:16 ET (22:16 GMT)