At the end of six hours of negotiations OPEC announced the plan to cut production to a level of 32.5-33 million barrels per day (bpd) from 33.47 billion, bpd in August, the International Energy Agency (IEA) said.
The informal meeting was held on the sidelines of an IEA meeting in a bid to stabilise prices that have been battered by a stubborn supply glut since 2014.
Oil prices soared by as much as six percent following the news and extended gains in Asian trade on Thursday although at a slower pace.
At around 0100 GMT, US benchmark West Texas Intermediate (WTI) for delivery in November was up 23 cents to $47.29 and Brent crude for November added 22 cents to $48.91 a barrel.
The decision to cut output caught the market offguard.
Market watchers had been pessimistic about a cut or a freeze after similar efforts fell apart in April due to disagreements between OPEC majors Saudi Arabia and Iran.
Angus Nicholson, a Melbourne-based analyst with IG Markets said the OPEC decision was the main impetus for the price surge but said details of the deal “sound a bit fuzzy at the moment”.
“There is the possibility that OPEC managed to commit to a weak deal at this meeting that may pave the way for a more comprehensive production cut at the November meeting,” he said in a note, referring to OPEC’s formal meeting on November 30.
“A more comprehensive deal from OPEC and Russia at the November meeting would easily clear the way for WTI oil to trade around US$55.”
Nicholson also said official data showing a fall in the weekly US commercial crude inventories helped to boost the market.
The US Energy Information Administration said Wednesday that crude stocks in the world’s top oil consumer fell by 1.9 million barrels, confounding expectations for a rise of three million barrels.
A decline in crude stocks signals stronger consumption and is positive for oil prices.
Energy-linked currencies led a rally in high-yielding units Thursday after OPEC’s surprise deal to cut oil output sent crude prices soaring.
Officials at the Organisation of Petroleum Exporting Countries, meeting in Algiers, said they had reached an agreement to reduce production, sparking a more than five percent rally in crude.
The news set off a rally in risk assets, with global stocks and currencies surging.
In early Asian trade the oil-dependent Malaysian ringgit rose 0.6 percent, the Australian dollar added 0.4 percent and the Canadian dollar climbed more than one percent.
Optimism also lent support to other units as investors left safe-haven currencies. The South Korean won and Indonesian rupiah each added 0.1 percent against the greenback and the New Zealand dollar put on 0.8 percent.
The dollar also slipped against the euro, with the single currency buying $1.1230 from $1.1217 in New York Wednesday, while it also gained to 113.78 yen from 112.96 yen.
However, the dollar climbed to 101.37 yen in Asian trade, up from 100.70 yen in New York.