Saudi Arabia and Russia agreed to extend oil output-cut deal for another 9-month bid until March 2018 , forcing global markets to face supply glut and pushing up prices.
The deal and its statement surprised market investors and oil markets are experiencing another short term up-trend price rally. Crude oil WTI rose by 2.3% reclaiming $48 price levels , also Brent Oil rose by 2.1% to recatch $50 support levels which give hope to investors for further rise.
The deal can strengthen and ensure other oil producers to come along with more output cut because Saudi Arabia and Russia are the main oil producers and this deal can effect directly on demand-side of the market.
Saudi Arabia Khalid al-Falih and Russia Alexander Novak energy ministers said "they will do whatever it takes to control supply and reduce Oil inventories to their five year average." The statement and output cut deal extension will help investors to have main oil producers support to secure their investments and nullify U.S oil output rise.
Another factor which can help global energy markets is U.S. dollar index decline. U.S anti-globalization policy against huge infrastructural and globalization policy of China that was strongly supported by the Chinese government, will have a serious effect leading U.S dollar index to decline.
On the other hand, U.S. Federal Reserve increased interest rates from 0.25% to 1% Since Jan 2017. In the latest report and statement, Fed announced:
There's a chance for further interest rate rise if economical factors prepared.
The combination of the mentioned issues may stabilize global energy markets but still U.S energy reports stand against recent price-drop preventing policies which can put the pressure on investors and producers.