Crude rose above $55 a barrel as rising prospects of a tightening market after last week’s OPEC landmark deal to cut production has given speculators impetus to increase bets on higher prices.
Monday’s gains took the rally since the Organization of the Petroleum Exporting Countries’ agreement was struck on Wednesday to 19 per cent for Brent and 16 percent for U.S. crude.
Last week’s 12.2 per cent increase was the largest one-week rise since February 2011.
“OPEC sentiment continues to support oil markets,” said Hans van Cleef, senior energy economist at ABN Amro in Amsterdam. “Speculative short positions are still at elevated levels and as more traders unwind these positions they could trigger more support for oil prices.”
Brent crude rose to hit 55.33 dollars, its highest since July 2015.
U.S. crude West Texas Intermediate (WTI) traded at a peak point for the day of 52.42 dollars, also the highest since July 2015.
About 380,483 lots of the front-month contract were traded some 57 per cent of the previous session’s volume.
Weekly data from the InterContinental Exchange on Monday showed investors had raised net long positions on Brent to the highest level in four weeks.
After OPEC 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.
Iran, which was granted an output rise as part of the OPEC deal as it recovers production curbed by sanctions, will also attend the meeting, media said.