Oil prices surge on OPEC production cut expectations

LONDON — Oil prices surged Wednesday on expectations of a production cut from the OPEC cartel of producers. Shares in oil companies rose in the slipstream of higher oil prices, helping indexes around the world to post solid gains.

OIL WATCH: The international benchmark for crude oil, Brent, soared $3.80, or 8.2 per cent, to $50.18 a barrel as oil ministers from the Organization of the Petroleum Exporting Countries seemed to focus less on whether there would be a cut and more on how it would be shared among members. A decision to cut production could have a lasting impact on consumers, as oil price increases feed into the cost of car fuel, heating and electricity. The rate traded in New York was up $3.35, or 7.4 per cent, to $48.65 a barrel.

ANALYST TAKE: “No official announcement has been made yet, but the markets seem convinced about the outcome,” said Fawad Razaqzada, an analyst at Forex.com. “The only thing speculators are not too sure about yet is the detail of the deal: who will cut oil production and by how much, and who will freeze and at what levels?”

OIL STOCKS: Higher oil prices mean more revenue for firms extracting oil. Unsurprisingly, oil stocks got a big boost from the higher crude rates in the markets. Britain’s BP, for example, saw its share price spike 3.4 per cent, while France’s Total rose 1.7 per cent. Spain’s Repsol advanced 4.5 per cent and Italy’s ENI bounced 3.2 per cent.