Dow Jones hits new all-time high as Opec deal nears success

Energy stocks were boosted by reports of an Opec production cut

America’s Dow Jones stock markets has hit a new record high on reports that the Organisation of the Petroleum Exporting Countries (Opec) has agreed to an output cut at its meeting in Vienna.

The cartel met on Wednesday to discuss terms of a potential deal to cut production for the first time in eight years in an effort to prop up prices that have fallen by more than half since 2014 due to oversupply.

The Dow Jones industrial average rose around 70 points at the start of trading in New York, hitting a new record intraday high, with energy stocks boosted amid a reported deal to cut production.

The S&P 500 gained about 0.4 percent, also reaching record levels, with energy spiking about 4 percent to lead advancers.

Meanwhile, Brent crude has surged by over 7 per cent to $50, after a flurry of positive comments from Opec ministers.

"Oil is leading the way and we had some very good economic data, “Peter Cardillo, chief market economist at First Standard Financial told CNBC.

"The oil deal is good news and it should help stocks. The economic news is even better because it points to better growth," he added.

An Opec deal would be aimed at cutting into a global oversupply of oil that has severely depressed prices since 2014. A proposal would probably mean the group cutting production by more than a million barrels a day, which represents about 1 per cent of the global oil supply.

The outlines of the deal emerged as ministers on their way into the meeting struck a markedly more optimistic tone, signaling the group’s three largest producers -- Saudi Arabia, Iran and Iraq -- have overcome differences on how to share the burden of cuts.

Saudi Arabia's energy minister said that the sentiment was "optimistic”.

"We don't know [if a deal will be reached]," Khalid al-Falih said as the talks started.

We will find out during the meeting. I think the sentiment generally is optimistic and positive," he added.

Iraqi oil minister Jabbar al-Luaibi said Opec ministers were unanimous in favour of an output cut, following a breakfast meeting.

"The extent of the [price] move shows no one wants to miss the boat. There must be a general consensus that there will be a cut, whether it’s going to be bullish, I don’t know, but it’s the domino effect," Tamas Varga, analyst at PVM Oil Associates said.

Analysts at Goldman Sachs, Barclays, and ANZ agree that oil prices will quickly rise above $50 per barrel should Opec come to an agreement. Without a deal, the consensus is for a fall to the low $40s.