On Monday, crude prices leapt in anticipation of tighter crude supply going into next year and following the verdict by OPEC as well as other crude producers to cut production to prop up prices.
Brent crude futures were trading at $55.57 a barrel, soaring 0.7% from their last close. US West Texas Intermediate crude futures rose 0.8%, hitting $52.33 a barrel.
Market participants told that the higher prices in front-month oil futures were due to hopes for a tighter market.
The Organization of the Petroleum Exporting Countries as well as other producers led by Russia have announced cutbacks of nearly 1.8 million barrels per day in crude output from January 2017 in an attempt to bolster prices to minimize rampant global overproduction.
With market participants currently expecting a relatively high level of compliance with the output cut agreements, oil prices should be well supported.
By the way, Saudi Arabia has stressed its willingness to reduce production below 10 million bpd if required.
