The trading frenzy sparked by Opec’s historic deal on Wednesday to agree a production cut has continued to make its presence felt throughout markets worldwide, with oil-related shares gaining further and futures prices rising beyond the levels seen after the announcement.
Prices for both Brent crude and West Texas Intermediate (WTI) traded well above $50 per barrel on futures markets for the first time in over a month, after price-fixing cartel Organisation for Petroleum Exporting Countries (Opec) surprised investors by agreeing to cut production to below 32.5m barrels per day.
Brent crude prices rose to their highest values this year, breaking through the $54 per barrel mark, and WTI futures rose above $51.
The rise in prices boosted oil-related stocks throughout the world, protecting London’s FTSE 100 from heavier losses and helping the New York’s Dow Jones Industrial Average to a small gain.
Shares in engineering firm Weir Group, which produces oil and gas pumps, were the biggest risers in London, gaining 5.42 per cent. Tullow Oil, Royal Dutch Shell and BP also continued to see their share prices gain by over two per cent. Chevron and Exxon Mobil led gains among oil companies on the Dow Jones.
The production cut is still dependent on compliance from individual Opec members but markets have continued to take the deal at face value, pricing in a fall in supply after oversupply drove down prices.
Opec member countries have come under increasing pressure to cut production as low prices have weighed on government budgets. Saudi Arabia had attempted to force higher-cost producers out of business and preserve their market share as Opec’s biggest producer by resisting a cut.