WTI, Brent Crude Rebound on Monday as OPEC Devises Plan to Cut Production

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Crude oil futures soared on Monday as traders held hope that OPEC may succeed in its plan to curb crude output, according to Bloomberg MarketWatch.

On the New York Mercantile Exchange, January West Texas Intermediate crude jumped $1.02, or 2.2%, to settle at $47.08 a barrel, marking the first session gain since November 21.

On London’s ICE Futures Exchange, January Brent crude, the global benchmark, climbed $1.00, or 2.1%, to end trading at $48.24 a barrel.

Oil initially lost ground as hopes faded that OPEC members would be able to complete a deal to curb output. Prices took a hit after Saudi Arabia said it won’t meet with Russia and other non-cartel members. Futures later rebounded on signs other OPEC members are making a last-ditch effort to save the deal.

Meanwhile, tension and mistrust among the OPEC cartel has addled any potential agreement to set production limits. Several countries — including Iran, Iraq, Libya and Nigeria — are lobbying to be exempt from a potential deal on production cuts. Analysts cautioned that failure to reach an output deal could send prices down by more than $10 a barrel.

“The stakes are high, and the unusual amount of diplomacy would suggest a firm deal is far from in place, but all parties will be very aware [that] failure to deliver a deal will see crude prices back on their way to a $30 dollar handle very quickly,” said Stuart Ive, a client manager at OM Financial.

An agreement to slash almost 2% of global output over the next months will likely buoy prices to a range around $60 a barrel, but it also means U.S. shale producers will be encouraged to open their spigots more in an effort to capitalize on higher prices, according to Vivek Dhar, a commodities strategist at Commonwealth Bank of Australia. Dhar indicated U.S. shale producers could then grab a larger share of the market while other producers are left to deal with low prices after supply increases again.

On its expiration day, December natural gas rose 14.7 cents, or 4.8%, to settle at $3.232 per million British thermal units on the New York Mercantile Exchange. January natural gas, the new front-month contract, gained 5.5 cents, or 1.8%, to end trading at $3.202 per million British thermal units.