Price of Brent crude oil jumped above $55 a barrel on Monday, December 5, trading at a fresh 16-month high, as hope emerged for the prospect of a tightening market after OPEC members agreed on a landmark deal to cut production last week.
Monday’s gains take the rally since the OPEC agreement was struck on Wednesday to 19 percent for Brent and 16 percent for U.S. crude. Last week’s 12.2 percent increase was the largest one-week rise since February 2011, CNBC reports.
Brent crude oil futures, the global benchmark used to trade oil, soared to its highest since July 2015 to $55.33 a barrel. It last traded up 50 cents, or 0.9 percent, at $54.96 a barrel at 12:26 p.m. ET (1726 GMT).
U.S West Texas Intermediate, WTI), crude oil traded up 28 cents at $51.96 a barrel. It earlier rose as high as $52.42, also a high going back to July 2015.
The cartel deal has given speculators impetus to increase bets on higher oil prices. Weekly data from the InterContinental Exchange on Monday showed investors had raised net long positions on Brent to the highest level in four weeks.
“OPEC sentiment continues to support oil markets. Speculative short positions are still at elevated levels and as more traders unwind these positions they could trigger more support for oil prices,” said Hans van Cleef, senior energy economist at ABN Amro in Amsterdam.
After the Organisation of the Petroleum Exporting Countries last week agreed to curb production by 1.2 million barrels per day (bpd) from January, eyes have now turned to a meeting this weekend between OPEC and non-OPEC producers to expand the deal.
Non-OPEC producers are expected to agree to add an output cut of 600,000 bpd in Vienna on Dec. 10.
