Oil breaks above $50 a barrel as investors warm to OPEC deal
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Oil rose to its highest since August above $50 a barrel on Monday, supported by a planned production cut by exporter club OPEC, although analysts cautioned the stubbornness of the existing supply overhang could temper a longer-lasting rally. December Brent crude futures were last up 50 cents at $50.69 a barrel, off a session low of $49.74, while U.S. West Texas Intermediate (WTI) rose 45 cents to $48.69 a barrel, above the day's low at $47.78.
The Organization of the Petroleum Exporting Countries said last week it would cut output to between 32.5 million barrels per day (bpd) and 33.0 million bpd from about 33.5 million bpd, with details to be finalized at its policy meeting in November. Initial skepticism last week over the effectiveness of the deal in eroding the global surplus gave way to a wave of short-covering that drove the price above $50 a barrel for the first time since late August on Monday.
OPEC's oil output is likely to reach 33.60 million bpd in September from a revised 33.53 million bpd in August, its highest in recent history, a Reuters survey found on Friday. "Sentiment has been slightly dented by a Reuters survey Friday, showing that despite agreeing to cut production OPEC pumped crude in record amounts through September," said Jeffrey Halley, senior market analyst at brokerage OANDA in Singapore.