Oil prices have yet to recover from losses

Opec president Suhail al Mazrouei says there is a surplus of only 26 million barrels of oil in the market now. – EPA pic

Opec president Suhail al Mazrouei says there is a surplus of only 26 million barrels of oil in the market now. – EPA pic

The U.S. benchmark crude is on track for a 13 percent decline this month.

The global benchmark Brent has declined about 12 percent since the Organization of Petroleum Exporting Countries and its allies including Russian Federation announced an agreement to cut output earlier this month amid investor skepticism that the reductions will be enough to balance supply and demand.

The West Texas Intermediate for February delivery rose 3.69 US dollars to settle at 46.22 dollars a barrel on the New York Mercantile Exchange, while Brent crude for February delivery increased 4 dollars to close at 54.47 dollars a barrel on the London ICE Futures Exchange. The OPEC+ agreement will have an impact on prices over time and its effectiveness can't be judged based on market action of just one or two weeks, Kremlin spokesman Dmitry Peskov said. Meanwhile, S&P 500 Index futures fluctuated Wednesday while the benchmark U.S. gauge is at the brink of sliding into a bear market.

The letter also states that countries will reduce production by 3.02% to meet the 1.2 million-barrel-per-day cut, up from the 2.5% agreed on during the meeting. That follows the United Arab Emirates energy minister's remarks signaling the producers could have an extraordinary Opec meeting and discuss additional curbs if needed. A recovery in the US stock markets could help drive prices higher because of a shift in investor sentiment, but these gains are likely to be limited by rising concerns over a global economic slowdown.

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In wider financial markets, investors were still anxious as the S&P 500 Index of equities stands just 7 points away from completing a full-blown bear market drop.

After a turbulent eight weeks, during which crude oil lost almost 30 percent of its value, a last minute deal between countries of the Organization of Petroleum Exporting Countries (OPEC) and non-OPEC countries to cut production is expected to lend some stability to the market.

"I think there is a little bit of over-extension to the downside linked to global market fears", said Olivier Jakob, analyst at Petromatrix. "For now, those statements are ignored by the market because we are in this bearish cycle". The contract slumped $3.06 to $42.53 on Monday. It earlier fell to $49.93, the lowest since July 2017, and posted a 6.2pc slide in the previous session.

Brent for February settlement dipped $1.39 to $52.43 a barrel on London's ICE Futures Europe exchange.

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