OPEC Agrees To Oil Production Cut

Formal agreement to be announced at November meeting; prices jump 6%.

New York (Reuters) – Oil prices jumped as much as 6% on Wednesday after OPEC sources said the group has reached a deal to limit crude output at its policy meeting in November, a source for the producer group said.

Brent crude was up $2.76, or 6%, at $48.73 a barrel, after reaching a more-than two-week high of $48.96. The futures-related ETF for Brent, the United States Brent Oil Fund LP (BNO), was up 6.11% at 3 p.m. EST.

U.S. West Texas Intermediate (WTI) crude rose by $2.35, or 5.4%, to $47.02, peaking at $47.45, its highest since Sept. 8. The futures-related ETF for WTI, the United States Oil Fund LP (USO), was up 6.11% at 3 p.m. EST.

The Organization of the Petroleum Exporting Countries has agreed to limit production to 32.5 million barrels per day, OPEC sources said after talks held by the group on the sidelines of the Sept. 26-28 International Energy Forum in Algiers. The latest production figure for the group is 33.24 million bpd.

After reaching that target, OPEC will seek support from nonmember oil producers to further ease the global glut, the sources said.

"This was unexpected for sure ... no one that I know of saw it coming. The market doesn’t seem positioned for it. The fundamentals in the U.S. are already tighter than we expected and is due to get tighter," said Scott Shelton, energy broker and commodities specialist for ICAP in Durham, North Carolina.

(Additional reporting by Ahmad Ghaddar and Swetha Gopinath in London and Keith Wallis in Singapore; Scott Disavino in New York; editing by Marguerita Choy and David Gregorio.)