Brent crude oil prices rose above $55 a barrel on Monday, trading at a fresh 16-month high, as optimism spread about 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.
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 24 cents at $54.70 a barrel at 2:39 p.m. ET (1939 GMT).
(WTI) crude oil settled up 11 cents at $51.79 a barrel. It earlier rose as high as $52.42, also a high going back to July 2015.
Prices had eased slightly earlier in the session, sparking renewed buying.
"It seems that any dip is seen as a buying opportunity," said Carsten Fritsch, analyst at Commerzbank in Frankfurt.
The OPEC 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 Organization 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.
"We remain skeptical that non-OPEC producers will line up to pledge their own reductions when OPEC's announcement last week already largely took responsibility for rebalancing the market," said Tim Evans, energy futures specialist with Citigroup in New York. "In our view, the rally in prices represents an economic call for more production, not more cuts."
Transneft, Russia's pipeline monopoly, suggested on Monday a cut to oil output could begin in March.
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, SHANA news agency said.
However, one large uncertainty in the global supply balance is output from the United States, whose shale oil drillers proved more resilient than expected to weak oil prices.
U.S. energy firms extended their recovery in oil drilling into a seventh month last week, data from energy services firm Baker Hughes showed on Friday.
Overall, accounting for the recent rise in oil drilling, but also for cutbacks earlier this year on low prices, Goldman Sachs said "year-on-year production will decline by 620,000 barrels per day (bpd) in 2016 and increase by 55,000 bpd in 2017".