Investing.com - Oil prices rose strongly on Thursday, building on the previous session’s large gains after the Organization of the Petroleum Exporting Countries reached an agreement to cut production.
U.S. crude oil was up $1.29 or 2.61% to $50.72 a barrel at 10.00 ET, a level not seen since October 25.
Global benchmark Brent futures were at $53.26 a barrel, climbing $1.45 or 2.82% to the highest since October 10.
Brent settled at $50.47 on Wednesday, up $4.09 or 8.8%, after hitting an intra-day high of $50.49. U.S. crude ended at $49.44, up $4.21 or 9.3%.
OPEC agreed on its first production cut since 2008 on Wednesday, aimed at reducing a global supply overhang that has seen prices more than halve since mid-2014.
The 14-member cartel is responsible for a third of global oil production, or 33.6 million barrels per day. The deal will see output cut by 1.2 million bpd from January 2017.
Saudi Arabia undertook the largest cut, slashing output by 486,000 bpd and dropping its demand that Iran cut its output, in a deal that was seen as a victory for Tehran.
The group said it would reassess the effectiveness of the deal after six months.
The agreement also included coordinated action with non-OPEC members, who are expected to decrease production by 600,000 barrels a day.
On Thursday, Russia’s Energy Minister Alexander Novak said it will cut its oil output from November-December levels.
Novak said on Wednesday that Russia was prepared to reduce production by up to 300,000 bpd as a part of its agreement with OPEC.
But analysts said that the cuts are likely to cause other producers, especially U.S. shale drillers, to increase output.
Analysts are also doubtful over how the agreement will be enforced, as OPEC has no authority to make its members comply.