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Oil Prices Surge on OPEC Production-Cut Deal -- Update

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12/07/2018 | 04:08pm CET

By Stephanie Yang

-- Crude prices gained Friday following news of a tentative deal to cut production at a meeting of the Organization of the Petroleum Exporting Countries and its allies in Vienna.

-- Light, sweet crude for January delivery rose 4.2% to $53.65 a barrel on the New York Mercantile Exchange.

-- Brent, the global benchmark, rose 4.7% to $62.88 a barrel.


OPEC+: Members of the oil cartel reached a tentative agreement to cut output by 800,000 barrels a day, The Wall Street Journal reported. Non-OPEC producers proposed cutting 400,000 barrels a day for a total cut of 1.2 million barrels per day. The deal is still under negotiation. The news alleviated some pressure on the oil market, which has fallen about 30% from its October highs on a burgeoning supply glut and record crude production. OPEC began its summit Thursday and met with other allies on Friday to discuss measures to stabilize oil prices. "We are in new territory. This second day of non-OPEC meetings has been, since inception, more of a venue to rubber stamp, with only minor details being worked out. Now the group needs to work out not only non-OPEC, but the entire deal, soup-to-nuts," said Paul Sankey, managing director of Americas research at Mizuho, in a Friday report.

Crude stocks: U.S. stockpiles of crude oil unexpectedly fell by 7.3 million barrels in the week ended Nov. 30, ending at least two months of consecutive weekly builds, which had added to the bearish market sentiment and raised concerns about oversupply.


U.S. Exports: Record-low imports and rising exports helped make the U.S. a net oil exporter last week for the first time in 75 years. While analysts don't expect the phenomenon to last long this time, the milestone is "highlighting the culmination of a long-term trend that has been fueled by the shale boom," said Robbie Fraser, global commodity analyst at Schneider Electric.

Economic Data: The Friday jobs report offered more data for investors nervous about the impact of slowing fuel demand and global growth. The U.S. economy added 155,000 jobs last month, short of the 198,000 that economists expected. The unemployment rate held steady at 3.7%. Year-over-year wage growth matched October's 3.1% total, its best rate since 2009.


-- The Baker Hughes weekly oil-rig-count is released at 1 p.m. EST Friday.

-- Investors will parse OPEC and Energy Information Administration monthly reports next week to gauge the impact of lower Canadian supply and weaker oil prices.

(David Hodari contributed to this article.)

Write to Stephanie Yang at stephanie.yang@dowjones.com

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