(In paragraph 4, corrects three-week high in Brent to $49.81,
* Prices up 7-8 pct since news of OPEC cuts
* Lack of clarity on timing, quota for cuts bug analysts
* OPEC plans to cut 700,000 bpd, glut at 1.0-1.5 million bpd
By Barani Krishnan
NEW YORK, Sept 29 Oil prices jumped more than 1
percent on Thursday, with Brent nearing $50 a barrel on optimism
over OPEC's first planned output cut in eight years, although
gains were limited as some analysts doubted the reduction would
be enough to make a substantial dent in the global crude glut.
The Organization of the Petroleum Exporting Countries agreed
on Wednesday to cut output to 32.5-33.0 million barrels per day
(bpd) from around 33.5 million bpd, estimated by Reuters to be
the output level in August.
OPEC said other details will be known at its policy meeting
in November, leaving unanswered when the agreement will come
into effect, what new quotas for member countries will be and
for what periods, and how compliance will be verified.
Brent crude settled up 55 cents, or 1.1 percent, at
$49.24 a barrel. It hit a three-week high at $49.81.
U.S. West Texas Intermediate crude rose 78 cents, or
1.7 percent, to settle at $47.83 after a one-month high at
Since OPEC's announcement, Brent has gained about 7 percent
and WTI has risen nearly 8 percent, the biggest two-day rise
since April. On Wednesday, Reuters data showed volume in WTI hit
a record high of about 986,000 lots, about $4.6 billion in
Even so, Thursday's settlement, coming sharply off the day's
highs, suggested the rally was waning.
"The fact we came so close to $50 a barrel and yet did not
hit it tells me the market is beginning to sense this OPEC
production cut will be a sham," said Tariq Zahir, who trades WTI
time spreads for Tyche Capital Advisors in New York.
OPEC officials said their plan will remove around 700,000
bpd from the market. Analysts estimate the global crude
oversupply at between 1.0-1.5 million bpd.
Some analysts were upbeat about the deal.
Paul Horsnell, head of commodities research at Standard
Chartered, said it was significant Saudi Arabia's stance was
returning to price-defense from market share protection.
"We believe the meeting represents a 'read my lips' moment,
particularly on the part of Saudi Arabia," Horsnell said. "'Read
our lips, prices will rise'".
Analysts at Goldman Sachs said higher crude prices will spur
non-OPEC output, particularly U.S. shale oil. The U.S. oil
drilling rig count has risen in 12 of the 13 past weeks.
"If this proposed cut is strictly enforced and supports
prices, we would expect it to prove self defeating medium-term
with a large drilling response around the world," Goldman said
in a note. It maintained its end-2016 forecast of $43 and
end-2017 projection of $53, projecting a $7-10 rally in the
first-half next year if the cuts were honored.
(Additional reporting by Swetha Gopinath in LONDON and Keith
Wallis in SINGAPORE; Editing by David Gregorio)