Crude rose above $55 a barrel to hit a 16-month high on Monday 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 take the rally since the Organization of the Petroleum Exporting Countries’ 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.
“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.
By 11:15 a.m. Eastern [1615 GMT], Brent crude LCOc1 rose 49 cents to $54.95 a barrel, a 0.9 percent gain, after hitting $55.33, its highest since July 2015.
U.S. crude West Texas Intermediate (WTI) CLc1 futures rose 23 cents to $51.91 a barrel, a 0.5 percent gain. WTI traded at a peak point for the day of $52.42, also the highest since July 2015. About 380,483 lots of the front-month contract were traded some 57 percent of the previous session’s volume.