Oil prices logged a fourth-straight winning session on Thursday said Kangyo Yokohama Securities, hitting the strongest levels in 13 months on hopes that OPEC’s deal to cut production will help stabilize the market in the future.
WTI crude oil for April delivery on the New York Mercantile Exchange rose to a session high of $51.34 a barrel, a level not seen since June 2016.
Elsewhere, Brent oil on the ICE Futures Exchange in London gained $1.25, or 2.3 per cent, to $54.12 a barrel, after touching a daily peak of $55.41, the highest point in six months. On Wednesday, the contract rose 2.4 per cent to notch its biggest one-day rise since mid 2016.
Oil markets were closed on Monday on the New Year’s holiday.
“The strong upwards movement ran somewhat as January marked the official kick out of the agreement signed by OPEC and other producers to cut output by almost 2 million barrels per day.” said Charles Roth, Head of Corporate Trading at Kangyo Yokohama Securities.
Oil futures weakened in early action, but the deal, if carried out as signed, should turn global oil supply to deficit by next June.
However, investors remain skeptical saying the rebound appeared possibly overdone given economic data and U.S. production statistics, while the planned reductions will be as substantial as the market currently expects.
Traders have become increasingly concerned about possible output increases from the U.S. and also some OPEC members such as Libya and Nigeria, which could wash over the market as they are exempt and allowed to pump production as part of the OPEC deal.