Oil prices ease on doubts about Opec production cuts

The price of oil slipped back in Thursday trading as traders questioned whether the output cut agreed by Opec would be binding.

Prices had jumped by 6% on Wednesday's news that Opec had voted for the first production cut in eight years.

Oil ministers said full details of the agreement would be finalised at a formal Opec meeting in November.

The absence of detail prompted some to have second thoughts about whether the cartel would take actual firm action.

Michael McCarthy, chief market strategist at CMC Markets, said: "Investors and traders are sceptical - with good reason. More cynical traders are questioning the complete lack of detail, including the potentially problematic question of which nations will curtail production."

Brent crude dropped 0.5% earlier on Thursday, before surging back up to $49.20 a barrel, a 1% rise on the day.

Opec pledged to limit production by about 700,000 barrels a day, although the cuts will not be distributed evenly across the cartel, with Iran being allowed to increase production.

The outline deal will limit output from Opec countries to between 32.5 million and 33 million barrels a day, said Mohammed Bin Saleh al-Sada, Qatar's energy minister and current president of Opec.

Disagreements between Iran and its regional rival, Saudi Arabia, had thwarted earlier attempts to reach a deal.

Many of Opec's smaller members pushed for the cut after seeing oil prices plunge from $110 a barrel over the past two years because of oversupply and slowing demand.