All seemed quiet in the markets Monday with Asian equities rising, European shares dropping, and the S&P500 futures showing little change. But beneath this calm exterior a long awaited bounce was brewing. Brought on by months of planning and machinations involving more than a dozen governments with two leading the charge. The long anticipated agreement between the Saudi led OPEC cartel and the behemoth that is the Russian Federation had at last borne fruit. With the next planned OPEC conference less than two weeks away the announcement came not a moment to soon.

Crude oil surged above $49 on high volume, following the announcement by Saudi and Russian energy ministers that they were in favor of extending the OPEC production cut through the Q1 of 2018, a period of 9 months. The rise in oil took place across the board with WTI breaking its 50 DMA with a 3% rise, the highest intraday price in almost two weeks. Following comments by Russian President Putin, crude rose to session highs and Brent broke both its 50 and 200 DMA.

The agreement was expected given OPEC’s own admission that the production cuts it put in place on the first of this year have not had the desired effect of substantially reducing global inventory levels. In the words of Khalid Al-Falih, the Saudi Arabian minister of Energy, “The agreement needs to be extended as we will not reach the desired inventory level by June,”. “Therefore we came to the conclusion that ending will probably be better by the end of the first quarter of 2018”.

The agreement by the ministers to extend cuts at the same level of volume through the first quarter of 2018 gave hope to long suffering oil bulls that have been hoping OPEC’s production cuts would reinvigorate oil markets. Whether or not the cuts will have the desired effect remains to be seen, given the expected rise in production by players across the world not bound by the agreement.