Oil briefly rose above $51 per barrel today as investors weighed optimism over oil cartel Opec’s ability to agree on a production cut against the stubborn oversupply.
The group is meeting next month in Vienna after signalling at a summit last week in Algeria that they could reach their first output agreement in eight years.
Brent crude, the global benchmark, climbed above $51 per barrel this evening before settling around $50.79. West Texas Intermediate crude rose 0.87 per cent to $48.66 per barrel.
The benchmarks were buoyed after Iran’s state news agency reported that Iranian President Hassan Rouhani told his Venezuelan counterpart Nicolás Maduro that it was essential for oil producing countries to take a decision to raise the price of oil and stabilise the market.
Traders were initially sceptical of the deal, with doubts over whether it would be enough to clear the supply glut which has haunted crude markets for more than two years.
There have been suggestions that any decline in Organisation of Petroleum Exporting Countries (Opec) production would be countered by rigs coming back online in the US.
The US the oil rig count increased by seven rigs to total 425 last week according to the oil-field services company Baker Hughes.
Commodities titan Goldman Sachs said that the agreement could add as much as $10 to oil prices in the first half of 2017, however it's yet to revise next year's oil price forecasts due to the uncertainty of the proposal.
Phil Flynn, analyst at the Price Futures Group brokerage, said: "There’s already a soft commitment from Russia that it will be part of the Opec plan and if more non-Opec members get on board prices can only go higher."