Oil price rally to be short-lived as OPEC deal not enough

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M - Fasten your seat belts, gas prices could be in for a bumpy ride.

Despite early doubts it was possible, members of the Organization of Petroleum Exporting Countries reached an agreement to set a target production of 32.5 million barrels per day "in order to accelerate the ongoing drawdown of the stock overhang and bring the oil market rebalancing forward".

AB Bernstein analysts were quoted by the news agency as saying: "OPEC has agreed to an historic production cut".

On Thursday, Brent crude futures were trading at $54.22 a barrel at 1900 GMT - the highest level in almost 16 months, while USA benchmark, WTI crude, was trading at $41.59/Bbl.

"Aside from the false rally I believe we're seeing, motorists will soon be facing higher gasoline prices", he said. The Auto Club says average prices statewide have increase 8-cents in the last day.

The deal also included the group's first coordinated action with non-OPEC member Russian Federation in 15 years. Countries such as Russia, Saudi Arabia, Iran and Venezuela depend heavily on oil revenue to fund their governments and sustain their economies.

Although Riyadh has taken the bulk of production cuts, it is still producing nearly three times as much oil as regional rival Tehran, and will therefore still be in possession of a far larger market share. If implemented, the OPEC agreement would cut what the 14-member group said it expects for demand next year.

He said "We've seen the financial markets react with a spike in crude oil prices".

The good news for drivers is prices at the pump remain low, at least so far. "But we already takes into account the fact that the market will more or less balance addressing these production declines".

In fact, US producers have emerged stronger and leaner, allowing them to pump at prices that were once too low. Palm Beach County's average jumped 2 cents overnight to $2.28, according to AAA's Fuel Gauge Report.

WTI Crude is now up 0.12 percent on the day at $49.50 per barrel, with Brent Crude up 0.21 percent at $51.95 per barrel (0858GMT).

Compared with a year ago, though, diesel was 2 cents cheaper but regular was 11 cents higher, and premium 13 cents higher.

Gas prices usually drop, sometimes a lot, in December.

The latest production data from the U.S. Energy Information Administration showed U.S. production increased by 9,000 barrels a day to 8.7 million barrels for the week ended November 25.