OPEC to cut production, sends oil prices higher

In this Dec. 13, 2015, file photo the sun sets behind an oil pump in the desert oil fields of Sakhir, Bahrain. Oil prices jumped more than five percent on Wednesday after the OPEC reached a deal to cut oil production by 750,000 barrels a day. AP

NEW YORK, United States — US and European markets moved higher on Wednesday as oil producing countries reached a surprise deal to cut oil production, causing crude prices to jump more than five percent.

Following the agreement reached in Algiers by members of the Organization of the Petroleum Exporting Countries (OPEC), oil stocks moved higher in New York, bringing the rest of the market up with them.

The benchmark Dow Jones Industrial Average finished up 0.6 percent while the broader S&P 500 gained 0.5 percent and the tech-heavy Nasdaq Composite gained 0.2 percent.

Oil producers saw strong gains on hopes that tighter global supplies could put an end to two years of moribund crude prices: Exxon Mobil rose 4.7 percent, Chevron gained 3.3 percent and ConocoPhillips ended up 7.7 percent higher.

Earlier in the trading day, European stocks also rebounded, brushing aside a broad retreat across Asia, as oil prices pushed higher and Deutsche Bank shares rose, recouping some of their previous days’ losses.

London’s benchmark FTSE 100 index increased by 0.6 percent. In the eurozone, Frankfurt’s DAX 30 was up 0.7 percent at the close the Paris CAC 40 gained 0.8 percent on the day.

OPEC member country officials in Algiers said they had reached an agreement to limit production to between 32.5 million and 33 million barrels per day, cutting daily output by about 750,000 barrels.

The subsequent rally saw the price for a barrel of West Texas Intermediate jump $2.38 in New York to $47.05. North Sea Brent rose $2.72 to finish at $48.69 in London.

Deutsche Bank rebounds

Shares in Germany’s troubled Deutsche Bank rose more than 2 percent in Frankfurt as the German government and the bank sought to end speculation that authorities could bail out the lender, which has a weak capital base and faces a hefty sanction from US prosecutors in a financial crisis-related investigation.

Earlier this week, the company’s share price had sunk to a record low on reports that Germany’s biggest bank had asked Berlin for help after US authorities demanded a $14-billion fine.

Investors were also cheered by the decision from Canadian smartphone pioneer BlackBerry to cease manufacturing its own handsets and outsource production. The company’s share price gained 5.7 percent on the Nasdaq in New York.

Official US figures released Thursday showed orders for durable goods had been flat in August at $226.9 billion, boosted in part by a recent US Air Force order for mid-air fuel tankers from Boeing.

However, within the figures, analysts saw encouraging signs of rising capital expenditures.

“Businesses look like they’re spending again and that is good news for future growth,” the investment advisor Joel Naroff said in a client advisory, noting that business capital spending had recorded its third straight gain.

Elsewhere, Tokyo’s Nikkei stocks index closed down 1.3 percent, with a stronger yen dampening buying appetite. CBB