Oil jumps, markets narrow odds on Fed hike

Oil prices surged on Monday after OPEC+ announced a surprise round of output cuts of more than 1 million  barrels per day, a potentially ominous sign for global inflation just days after a slowdown in U.S. price data had boosted market optimism.

Brent oil futures jumped $3.94 to $83.83 a barrel on news output would be cut by around 1.16 million barrels per day. U.S. crude climbed $3.84 to $79.51, but was off its early peak of $81.69.

The change comes before a virtual meeting of an OPEC+ ministerial panel, which includes Saudi Arabia and Russia.

The latest reductions could lift oil prices by $10 per barrel, the head of investment firm Pickering Energy Partners said on Sunday.

Goldman Sachs lifted its forecast for Brent to $95 a barrel by the end of the year and to $100 for 2024.

"Today's surprise cut is consistent with the new OPEC+ doctrine to act pre-emptively because they can without significant losses in market share," Goldman said.

"While surprising, this cut reflects important economic and likely political considerations."

The surge in energy costs somewhat overshadowed Friday's slower reading for core U.S. inflation, which had seen Wall Street end the month on a strong note.

S&P 500 futures dipped 0.3 per cent on Monday, while Nasdaq futures lost 0.6 per cent. EUROSTOXX 50 futures eased 0.1 per cent, while FTSE futures added 0.1 per cent.

MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.4 per cent.