On the heels of OPEC’s much needed and highly anticipated production cut, crude oil futures rallied on Thursday as both WTI and Brent crude settled over the crucial benchmark of $50 a barrel, according to Bloomberg MarketWatch.
On the New York Mercantile Exchange, January WTI crude tacked on $1.62, or 3.3%, to settle at $51.06 a barrel, with futures prices logging their best settlement since October 19.
On the London ICE Futures Exchange, February Brent crude, the global benchmark, jumped $2.10, or 4.1%, to end trading at $53.94 a barrel. The settlement was the highest since August of last year.
Prices surged more than 9% on Wednesday following the announcement that OPEC struck the production deal.
“People are going to be watching closely if the group can now actually live up to their pledges,” says Stuart Ive, a client manager at OM Financial.
The cartel is expected to reassess the effectiveness of the deal in six months. OPEC’s next scheduled meeting is in Vienna on May 25, 2017.
“While we acknowledge that OPEC’s track record of delivering on production cuts has historically been poor, on a net basis we expect this to tighten crude markets,” said Scott Darling, the head of Asia-Pacific oil and gas research at J.P. Morgan.
Meanwhile, natural gas futures also rallied to their highest levels since December 2014 after the Energy Information Administration reported a weekly decline in domestic supplies that matched market expectations. Natural gas supplies in storage fell by 50 billion cubic feet for the week ending November 25.
On the New York Mercantile Exchange, January natural gas ended at $3.505 per million British thermal units, up 15.3 cents, or 4.6%.