Following the unexpected announcement by OPEC on the evening of 28th September 2016, during talks held on the side-lines of the International Energy Forum in Algiers, that they reached an agreement to limit production by 700,000 bpd to a range of 32.5-33.0 mbpd, both Brent crude and WTI crude oils settled up more than 5%, hitting the highest levels in the last 2 weeks.
This is significant as it is the first time in over 10 years that OPEC and non-OPEC members have cooperated and come to an agreement, which will be ironed out in November. After trading as low as $27/bbl back in February 2016 due to the current supply glut, Brent crude oil has moved to $48.63/bbl amid increasing demand and expectations the OPEC production cut will remove the existing oversupply and push prices above the $60/bbl mark.
The rally in the oil markets has pulled other commodity and equity markets noticeably higher. The UK energy markets have not been an exception, recording gains between 1% and 7%, leading many UK energy suppliers to pull prices. This news will add further fuel to the upside price pressure already existing as a result of the tight supply picture for this upcoming winter.
We would advise energy users to secure their energy supply contracts for the upcoming winter without hesitation as there is high upside potential.
Please get in touch with us at amber energy for further guidance around securing your energy supply contracts.