Crude futures jumped 4.6 per cent to US$46.78. Photo / AP
Crude futures jumped 4.6 per cent to US$46.78. Photo / AP
Oil prices jumped, while stocks on Wall Street rose, on a report that OPEC reached an agreement to limit output.
The Organisation of the Petroleum Exporting Countries agreed to reduce its oil output to 32.5 million barrels per day from the current production levels of around 33.24 million bpd, Reutersreported, citing two OPEC sources.
The producing group will agree concrete levels of production by each country at its next formal meeting in November, the sources said, according to Reuters.
One source also said that once production targets were reached, OPEC would reach out to non-OPEC producers for cooperation.
Crude futures jumped 4.6 per cent to US$46.78 after the Reuters report.
Wall Street also gained on the report of the OPEC deal. In 2.34pm trading in New York, the Dow Jones Industrial Average climbed 0.3 per cent, while the Nasdaq Composite Index climbed 0.5 per cent. In 2.19pm trading, the Standard & Poor's 500 Index rose 0.1 per cent.
"The market is rewarding the show of cooperation," John Kilduff, a partner at Again Capital, a New York hedge fund focused on energy, told Bloomberg.
"Their acts haven't matched their words so far but the market is giving them the benefit of the doubt. The desperation of Saudi Arabia to reach an agreement is readily apparent and increases the chances of success."
In the Dow, gains in shares of Exxon Mobil and those of Caterpillar, recently up 4.1 per cent and 3.2 per cent respectively, outweighed slides in shares of Nike and those of McDonald's, last down 4.3 per cent and 1.7 per cent respectively.
Shares of Chevron also rose, trading 2.8 per cent higher.
Shares of Nike dropped after the company's future orders, a key barometer of demand for its products, fell short of analysts' estimates.
In testimony to US lawmakers in Washington, Federal Reserve Chair Janet Yellen said the central bank expects the US jobless rate to fall further and that the current growth pace of the economy points to a gradual increase in interest rates.
The market is rewarding the show of cooperation.
In Europe, the Stoxx 600 Index finished the day with an advance of 0.7 per cent, bolstered by a gain in Deutsche Bank shares. The UK's FTSE 100 Index rose 0.6 per cent, while Germany's DAX Index gained 0.7 per cent, and France's CAC 40 Index added 0.8 per cent.
Shares of Deutsche Bank rose as it agreed to sell its UK insurance unit and chief executive officer John Cryan ruled out a capital increase.
"Banks picked up following Cryan's comments -- that helped sentiment," Patrick Spencer, London-based vice chairman of equities at Robert W Baird, told Bloomberg. "As banking worries are slowly getting behind us, the risk-on sentiment will be back."
