Brent oil clocks 16-month high on first global oil pact

Brent oil jumped to $57.50; it’s highest since mid July 2015 after the OPEC and non-OPEC producers on Saturday reached their first output cut deal since 2001.

Non-OPEC producers led by Russia agreed to cut the output by 558K barrels per day. The cut is equivalent to the demand growth seen from China and India.

Saudi’s ‘whatever it takes’ moment

Buoyed by the non-OPEC deal, Saudi took a page out of ECB President Mario Draghi’s book by stating it is ready to ‘do whatever it takes’ – cut production below the level agreed on November 30… Even below the psychological figure of 10 million barrels per day. Consequently, oil benchmarks spiked in early Asia.

Energy/Mining shares could rally

Oil and Mining stocks across the globe are likely to cheer the first global oil deal since 2001. UK’s FTSE 100 may close-in on 7000 levels, while US indices could see another record high closing.

Brent Technical Levels

Brent was last seen trading around $56.60/barrel. A break above $57.70 (session high) would open doors for $58.55 (mid-Dec 2015 low). A major hurdle above the same is directly seen at $60.00. On the other hand, a breakdown of support at $56.00 (zero figure) could yield a correction to $54.29 (session low), under which a major support is seen directly at $51.80 (weekly 5-MA).