Oil prices hit 16-month highs ahead of planned OPEC output cut
Oil prices rose to fresh multi-month highs on Monday, amid hopes that an announced output cut by the Organization of the Petroleum Exporting Countries will help reduce a global supply glut and shore up prices.
U.S. crude oil was trading at $52.23 a barrel at 09:39 GMT, a level not seen since July 2015, up 62 cents or 1.26% from its last close.
Global benchmark Brent futures rose 73 cents or 1.34% to $55.19 a barrel, also the highest level since July 2015.
U.S. crude rallied 14% last week, the largest weekly percentage gain since early 2011 and Brent rose nearly 15% for the week after OPEC agreed on its first production cut since 2008.
The deal will see the producer cartel cut output by 1.2 million barrels per day from January 2017 in a bid to reduce massive global oversupply that has pressured oil prices lower since mid-2014.
The 14-member group is responsible for a third of global oil production, or 33.6 million bpd.
The agreement also included coordinated action with non-OPEC members, who are expected to decrease production by 600,000 barrels a day.
Russia has said it will cut production by 300,000 barrels a day, but said it would do so at November levels.
On Friday Russia reported that its daily oil production averaged 11.21 million bpd in November, the highest in nearly 30 years.
OPEC is expected to hold a meeting with non-OPEC members in Vienna on Friday to finalize the details of its oil output cut agreement.
But analysts have warned that the cuts are likely to cause other producers, especially U.S. shale drillers, to increase output.
A report from energy services firm Baker Hughes on Friday showed that the number of active U.S. rigs drilling for oil climbed by three to bring the total count to 477 last week, the most since January as oil prices rose.