Yesterday, the price of crude oil Brent has grown above 52 USD per barrel after the news that OPEC countries have reached agreement to cut oil production by 1.2 million barrels, which is 1% of the world’s total oil output.

The agreement has become the first successful attempt to reduce oil production since 2008 and led to the rise in oil prices by over 10% on Wednesday.

Saudi Arabia, one of the most influential members of the cartel, will significantly cut oil production.

February futures for crude oil Brent have increased by 0.72%, up to 52.91 USD per barrel, which is the highest level in 5 weeks. Yesterday, spot-price of Brent has reached the level of 52.30 USD per barrel; today the price reached the new highs of 52.45. Although at the beginning of the European session investors started to take profit the price is still above 51.10 (highs of July and August).

The main question now if the cartel members will fulfil the terms of the agreement, as there have been cases before when cartel members violated some agreements.

Anyway, agreement to cut oil output will be the main driver of movement in oil prices. Meanwhile excess of oil supply continues. The number of active drilling rigs in the USA is increasing and the US President Donald Trump promises to lift restrictions for oil production in the USA.

It is possible that yesterday’s agreements will be ‘amended’ and soon the price of crude oil Brent will go back below 50.00 USD per barrel and continue to decline.Brent: OPEC’s decision. Fundamental analysis for 01/12/2016

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