Oil rallied, as did energy stocks, after OPEC agreed on details to cut output for the first time in eight years as it aims to stem a global glut.

West Texas Intermediate crude futures jumped 8.8 per cent to US$49.19 a barrel in early afternoon trading in New York.

The Organisation of Petroleum Exporting Countries agreed to cut production to 32.5 million barrels per day, down from the current 33.64 million, according to media reports.

"This should be a wake-up call for sceptics who have argued the death of OPEC," Amrita Sen, chief oil analyst at Energy Aspects, told Bloomberg. "The group wants to push inventories down."

Advertisement

Wall Street rose. In 1.10pm trading in New York, the Dow Jones Industrial Average rose 0.4 per cent. It reached a record high 19,225.29. In 12.55pm trading, the Standard & Poor's 500 Index eked out a 0.07 per cent gain. The S&P 500 climbed to a record 2,214.10.

The Dow moved higher as gains in shares of Goldman Sachs and those of Chevron and Exxon Mobil, up 3.3 per cent, 2.7 per cent and 2.4 per cent respectively, outweighed slides in shares of Visa and those of Verizon, down 1.6 per cent and 1.1 per cent respectively.

Goldman advanced on a bullish 'buy' report from Deutsche Bank.

The Nasdaq Composite Index slid 0.6 per cent.

US Treasuries dropped, sending the yield on the benchmark 10-year note 10 basis points higher to 2.38 per cent.

"This is more evidence of a divergence between rates markets in the euro zone and in the US," Antoine Bouvet, an interest-rates strategist at Mizuho International in London, told Bloomberg.

"The economic situation in the US makes the risk of inflation greater there and the potential for a rise in oil price compounds that risk."

The latest US jobs data further underpinned bets the Federal Reserve will raise interest rates at its two-day meeting starting December 13. An ADP Research Institute report showed that US private payrolls rose a higher-than-expected 216,000 in November.

"There is nothing in today's reports that put a roadblock in front of a Fed rate hike in December," Chris Rupkey, chief economist at MUFG Union Bank in New York, told Reuters.

This should be a wake-up call for sceptics who have argued the death of OPEC.

SHARE THIS QUOTE:

"The economy continues to move ahead powered by the American consumer who has got the income to both spend and save for a rainy day."

Investors will eye Friday's nonfarm payrolls report, which is expected to show US employers added 175,000 jobs in November, according to a Reuters survey.

In Europe, the Stoxx 600 Index ended the day with a 0.3 per cent advance from the previous close, bolstered by energy stocks. The UK's FTSE 100 Index and Germany's DAX Index both added 0.2 per cent, while France's CAC 40 Index gained 0.6 per cent.