Oil price extends gains after first Opec deal to cut crude production in eight years

Participants attend the opening session of the 15th International Energy Forum in Algiers on Sept 27, 2016.
Participants attend the opening session of the 15th International Energy Forum in Algiers on Sept 27, 2016.PHOTO: AFP

SYDNEY (Bloomberg) - Oil rose for a second day after Opec agreed to limit production for the first time in eight years at an informal meeting in Algiers.

Futures gained as much as 0.9 per cent in New York after leaping 5.3 per cent on Wednesday, the most since April. The group agreed to reduce output to a range of 32.5 million to 33 million barrels a day, said Iran's Oil Minister Bijan Namdar Zanganeh. Saudi Arabia and Iran wrong-footed traders who expected a continuation of the pump-at-will policy the group adopted in 2014.

West Texas Intermediate for November delivery climbed as much as 42 US cents to US$47.47 a barrel on the New York Mercantile Exchange and was at US$47.23 at 8.41am in Sydney. Total volume traded was about 22 per cent below the 100-day average.

Brent for November settlement rose US$2.72, or 5.9 per cent, to US$48.69 a barrel on the London-based ICE Futures Europe exchange on Wednesday. The global benchmark closed at a US$1.64 premium to WTI.