Brent
crude oil rose above $55 a barrel on Monday, trading at a 16-month high, on
rising prospects of a tightening market after OPEC agreed a landmark deal to
cut production last week. Monday's gains take the rally since the agreement was
struck on Wednesday to 19 percent for Brent, the biggest jump in almost eight
years, and 16 percent for U.S. crude.
Brent
futures, the global benchmark used to trade oil, soared to their highest since
July 2015 at $55.33 a barrel. They were at $55.04, up 58 cents, or 1 percent,
at 1431 GMT. West Texas Intermediate (WTI) crude traded up 48 cents, also one
percent, at $52.16 a barrel.
"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.
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.
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. 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.
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