Oil prices have reached $50 per barrel on after OPEC decided to cut production at its meeting in Vienna held yesterday.
OPEC and Russia decided to reduce oil production. Global surplus had pulled the prices down to $45, which is almost 50% of its 2014 prices.
This decision is seen as a collaborative effort of OPEC and non-OPEC oil producing countries in 15 years.
Brent crude LCOc1 was up by 20 cents to touch at $52.04 a barrel, while US light crude oil CLc1 also gained 10 cents to reach $49.54 per barrel, reported Reuters.
AB Bernstein analysts were quoted by the news agency as saying: “OPEC has agreed to an historic production cut. The cut of 1.2 million barrels per day (bpd) was at the upper end of expectations (700,00bpd-1.2 million bpd). An additional cut of 600,000bpd from non-OPEC countries could significantly add to what has been announced by OPEC.”
The deal boosted quick trading for the months of February and March.
Despite the agreement by oil cartel, investors are still apprehensive as individual countries may not stick to the deal.
Analysts also believe that other producers such as US may produce more oil due to the increasing prices.
OPEC produces nearly one-third of oil in the world at approximately 33.6 million bpd. The latest decision will reduce the production by 1.2 million bpd from January next year.