OPEC deal shows cartel's resolve _ and desperation

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The Bloomberg Commodity Index, a measure of returns from 22 raw materials, extended gains after the biggest jump in nearly three weeks on Wednesday, when OPEC agreed to cut output for the first time in eight years. She said that USA producers could not fill the void as quickly as next year, partly because some have too much debt and not enough cash to finance new drilling.

Oil prices edged off highs on profit-taking after Wednesday's more than 5% surge, prompted by Opec's first deal to limit output since 2008.

"It shows that OPEC is not dead, but it still needs more cooperation and talking to get to a real agreement", he told UPI.

The price of crude oil jumped more than 6% after the Organization of the Petroleum Exporting Countries agreed to limit production after a meeting in Algeria. Meanwhile, Iran's return to oil markets and sanctions relief have improved the situation in the country, whose economy struggled under the weight of global sanctions for years, Kilduff said. "Even though I think the agreement is probably a bit flimsy, the amount of co-ordination is part of the reason for the rally in risk". In the United States, crude stockpiles have fallen relatively sharply over the past four weeks, which is good news.

Several analysts have also pointed to concerns over weak global demand and the potential for US shale production to ramp up with higher prices to offset any gains. Oil companies, and the weaker yen, also lifted Tokyo shares, which closed 1.4% higher.

The Canadian dollar down 0.23 of a cent to 76.05 cents U.S., after having gained half a cent on Wednesday.

The pan-EuropeanStoxx 600 index (^STOXX) was higher, with most sectors and major bourses in positive territory.

Simple maths suggests that if you forego 10 percent of your output you need at least an 11-percent increase in prices to compensate for the lost revenue, meaning Brent would have to rise about $60 a barrel and stay there for it to make financial sense for the Saudis to carry the bulk of the burden of lowering OPEC's output.

The US Energy Information Administration said on Wednesday that crude stocks in the world's top oil consumer fell by 1.9 million barrels, confounding expectations for a rise of three million barrels.

Angus Nicholson, a Melbourne-based analyst with IG Markets, said the OPEC decision was the main impetus for the price surge but said details of the deal "sound a bit fuzzy at the moment".

Saudi oil revenue has halved over the past two years, forcing Riyadh to liquidate billions of dollars of overseas assets every month to pay bills and cut domestic fuel and utility subsidies last year.

However, given doubts about the deal, BNP Paribas European rates strategist Patrick Jacques said the upward pressure on bond yields would prove temporary.

The price of oil jumped after the deal was announced, but only to a high of around $47.50 per barrel.

So Iran is in no mood to curtail its production levels and in fact indicated lately that would keep pumping oil in the next few months till it reaches pre-sanctions levels.

CRUDE CUT: Oil prices leaped, sending shares of Asia-listed energy companies surging, after OPEC members struck a preliminary deal to curb output at a meeting in Algeria.

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