The price of Brent crude oil hit a one-year high this afternoon, rising to $53.50 a barrel.
The price of US benchmark West Texas Intermediate (WTI) was also trading up, rising by 2.6 per cent to $51.11 a barrel this afternoon - a four month high.
Optimism about an agreement among Opec producers helped boost the value of the black stuff earlier today. Both Brent and WTI rose after Saudi energy minister Khalid al-Falih said he was hopeful that a production deal aimed at limiting supply could be reached when the cartel meets in Vienna next month.
However, analysts had a more measured reaction to the signals from Opec.
Analysts remain cautious about oil supply
"We remain cautious of the merits of the deal struck by OPEC," said Shakil Begg, head of oil research and forecasts at Thomson Reuters.
"The agreement at present has granted notable exceptions to Nigeria, Libya and Iran, while the specific terms of the deal remain unclear. Country-level output quotas, implementation time, referencing period for the output ceiling, and the timeframe for the agreement are yet to be decided.
"Our analysis... suggests crude output from OPEC is lower compared to official numbers and forecast supply to decline naturally following the end of the peak summer period. Given seasonal reductions in domestic demand we actually expect greater supply available for export from major OPEC producers over the coming months as supply disruptions reduce in certain countries. As a result, we do not expect any material change to physical supply to the market in the near-term."
The surge in the oil price comes as BP boss Bob Dudley told reporters at the World Energy Conference in Istanbul that the global oil market is "pretty much in balance", despite industry-wide expectations that oversupply will continue well into next year.
Meanwhile, the International Energy Agency said today that the world is becoming more energy efficient despite the availability of cheap oil and natural gas.
WTI broke through the $50 barrier just last week, buoyed by data from the US Energy Information Administration which showed oil stocks fell by 3m barrels in the week to 30 September.
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