Oil rises close to $50/bbl; doubts on OPEC plan cap gains
By Barani Krishnan
NEW YORK (Reuters) - Oil jumped more than 1 percent on Thursday, with Brent nearing $50 a barrel on optimism over OPEC's first planned output cut in eight years, although gains were limited by doubts the reduction would make a substantial dent in the global crude glut.
The Organization of the Petroleum Exporting Countries agreed on Wednesday to cut output to 32.5-33.0 million barrels per day (bpd) from around 33.5 million bpd, estimated by Reuters to be the output level in August.
OPEC said other details will be known at its policy meeting in November, leaving unanswered when the agreement will come into effect, what new quotas for member countries will be and for what periods, and how compliance will be verified.
Brent crude LCOc1 settled up 55 cents, or 1.1 percent, at $49.24 a barrel. It hit a three-week high at $49.81.
U.S. West Texas Intermediate crude CLc1 rose 78 cents, or 1.7 percent, to settle at $47.83 after touching a one-month high at $48.32.
Both Brent and WTI were up 7 percent on the week. On Wednesday, Reuters data showed volume in WTI hit a record high of about 986,000 lots, about $4.6 billion in traded value.
But Thursday's settlement, coming sharply off the day's highs, suggested the rally was waning.
"The fact we came so close to $50 a barrel and yet did not hit it tells me the market is beginning to sense this OPEC production cut will be a sham," said Tariq Zahir, who trades WTI time spreads for Tyche Capital Advisors in New York. Continued...