Oil futures continued to rise for a second successive session on Thursday (1 December) following Opec's move to cut its headline crude production by 1.2 million barrels per day (bpd) to 32.5 million bpd at the conclusion of its meeting in Vienna, Austria overnight.
The cartel said that the bulk of the reduction would come from Saudi Arabia, which would account for 486,000 bpd. Opec also said its output cut will be supported by non-Opec producers to the tune of a 600,000 bpd reduction, of which the Russian federation will account for 300,000 bpd.
At 10:59pm BST, the Brent front month futures contract was up 4.05% or $2.10 to $53.94 per barrel, adding to an overnight spike of over 8%. Concurrently, the West Texas Intermediate contract bounced back above $50, registering a 0.18% or 9 cents intraday gain to $51.15 per barrel.
At the conclusion of the summit, Mohammed Bin Saleh Al Sada, Qatar's Minister of Energy and Opec President described the decision as "historic."
"We have no regrets about not having cut production in the summer of 2014. Opec has reacted to current oil market realities in taking this decision and delivered on what we agreed in September [at the International Energy Forum in Algiers]."
Analysts said the Opec-supported rally had only just begun and its impact would be felt for a while yet. Fawad Razaqzada, market analyst at Forex.com, noted: "Oil prices did rally massively on Wednesday, but that was the unwinding of the downward move from the summer. There's so much upside potential left in the rally in my view because the market will now be in balance earlier than would have been the case without a deal.
"US shale producers will most likely ramp up production again which will ultimately keep a ceiling on prices in the long-term. But in the short to medium term, I think we can expect to see significantly higher oil prices now."
Analysts at JBC Energy said a big deal of such proportions will be keenly scrutinised by the wider market. "For instance, it is unclear to what extent the entire agreement is subject to concrete non-OPEC contribution, with another meeting possibly to follow on 9 December.
"In theory this leaves room to question the entire deal, but given all the efforts going into it as well as the clear-cut interests of the involved producers, we think there will be some more or less concrete contributions or at least no outspoken sabotage of the accord."