US, Brent crudes rise more than $1 after OPEC, allies reach deal

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After the strong start, Brent futures ended just 23 cents, or 0.4 per cent, higher at $60.20 a barrel, while U.S. West Texas Intermediate (WTI) crude rose 65 cents, or 1.3 per cent, to $51.65. Meanwhile, China's vice premier discussed a timetable and road map on trade talks with his USA counterpart.

"Volatility will be high in the near future, but going into 2019, we are constructive on oil prices", Hootan Yazhari, head of global frontier markets equity research at Bank of America Merrill Lynch, told CNBC's Dan Murphy on Tuesday.

Undermining the supply cuts is soaring output in the United States, where crude production C-OUT-T-EIA has hit a record 11.7 million bpd.

OPEC members are set to slash output by 800,000 barrels per day, while non-OPEC producers will cut 400,000 barrels per day.

The Saudi minister noted before the meeting that the oil pumpers are looking for a sufficient cut to balance the market.

Crude oil prices rose early Wednesday, buoyed by expectations of a US inventory reduction, as well as reports of production cuts by OPEC, Libya and Canada.

The meeting took place after OPEC and non-OPEC oil exporting countries rejected pressure from U.S. President Donald Trump to further reduce oil prices by refraining from cutting production.

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"We believe oil prices will resume their path back up to $70 average next year, potentially higher in the second quarter for a brief spell of time".

"The surge in US supply in recent months should be a reason for caution", Bank of America Merrill Lynch said in a note on Monday.

The decision will be implemented from January, 2019 and the production cut will continue for 6 months.

The supply surge from the world's top three oil producers occurs as forecasters warn oil demand growth will be softer than anticipated next year.

OPEC and non-OPEC producers reached an agreement in December 2016 to curtail oil output jointly and ease a global glut after more than two years of low prices.

Despite Friday's OPEC-led decision to trim output by 1.2 million barrels per day starting in January, overall sentiment remains a little bearish as traders cast doubts that the planned supply cuts will be enough to trim supply and stabilize prices.

Oil prices have fallen sharply since October on signs of an economic slowdown, with Brent losing nearly 30 percent in value.