Dec. 1 (UPI) -- Enthusiasm caught up with OPEC's decision to extend production cuts through 2018, with a de facto lid on Libya and Nigeria sending oil prices higher on Friday.
Crude oil prices jumped early Thursday morning in anticipation of an agreement to add nine more months to a deal that sidelined about 1.2 million barrels of oil per day from the global market.
The deal is aimed at draining the surplus on the five-year average in global crude oil inventories, and Saudi Oil Minister Khalid al-Falih said Thursday that producers were only halfway to their goal of balance.
The deal had been undermined in part by exemptions for Libya and Nigeria, two members of the Organization of Petroleum Exporting Countries that needed oil revenue to support national security efforts.
"Oil prices are responding positively to an extension of the current OPEC, non-OPEC, production deal, especially because Nigeria and Libya agreed to cap production," Phil Flynn, a senior market analyst for the PRICE Futures Group in Chicago, said in a commentary emailed to UPI early Friday.
Crude oil prices were in clear rally mode in early morning trading. The price for Brent crude oil was up 1.5 percent as of 9:20 a.m. EST to $63.57 per barrel. West Texas Intermediate, the U.S. benchmark for the price of oil, was up 1.7 percent to $58.36 per barrel.
Russia's stance on the decision was pivotal and a call for a June review was considered a win as it provided some non-OPEC members a degree of flexibility. Speaking Friday, however, Vagit Alekperov, the head of Russian oil company Lukoil, said the mid-$60 range for oil was a fair price.
Thursday's morning rally was thwarted by a report from the U.S. Energy Information Administration that total U.S. crude oil production in September was 9.48 million barrels per day, a 3.2 percent increase from August and a 10.8 percent increase year-over-year.
Big shale oil producers showed marked gains from August, with North Dakota and Texas posting double digit gains.
Friday's rally, however, may be supported by a study from the Massachusetts Institute of Technology, cited by Bloomberg, that found EIA projections could be overstated.
"In other words, the data on shale may be all fracked up," Flynn said.
Data from drilling services company Baker Hughes, however, could undercut the optimism if it shows an increase in U.S. exploration and production activity.