Oil prices shot up 12 percent, smashing trading volume records, after OPEC and Russia cut a deal to reduce output to drain a global supply glut, but analysts warned they could remain modest by historical comparison as other producers fill the gap.
The Organization of the Petroleum Exporting Countries (OPEC)agreed on Wednesday its first oil output reduction since 2008 after de-facto leader Saudi Arabia accepted “a big hit” and dropped a demand that arch-rival Iran also slash output. The deal also included the group's first coordinated action with non-OPEC member Russia in 15 years.
Following the announcements, the price for Brent crude futures jumped 12 percent from below $50 on Wednesday to $52.54 per barrel at 0600 GMT.
U.S. West Texas Intermediate (WTI) crude futures also rose back above $50, trading at $50.11 a barrel at 0600 GMT.
The development also triggered frenzied trading, with Brent futures trading volumes for February and March, when the supply cut will start to be visible in the market, hitting record volumes.
The second front-month Brent crude futures contract, currently February 2017, traded a record 783.000 lots of 1.000 barrels each on Wednesday, worth around $39 billion and easily beating a previous record of just over 600.000 reached in September. That's more than eight times actual daily global crude oil consumption.
March Brent traded 288.64000 lots of 1.000 barrels each, compared with a previous record of 228.7000 lots done in July 2014.
The records also meant that Brent volumes far exceeded trades in U.S. West Texas Intermediate (WTI) crude futures, which tend to be higher than those for Brent, but which registered only 368.000 and 214.800 lots for February and March, respectively.