Analysts believe Brent crude will have an even rosier start to 2017, when prices will rise to $60 a barrel or more for at least the first quarter, as a production cut agreed by the Organisation of the Petroleum Exporting Countries (Opec) comes into effect.
"The closer cooperation among oil producers to cut production in 2017 is likely to hasten the rebalancing of the oil market and push oil prices to $60 a barrel or higher over the next three months," Giovanni Staunovo, analyst at UBS Wealth Management, told City A.M.
"We expect Brent to trade between $55 and $60 a barrel in six to 12 months."
At the end of November, the 13-member cartel of some of the world's biggest oil producers, led by Saudi Arabia, agreed to slash output by 1.2m barrels per day (bpd) during the first half of 2017.
This firmed up a plan the group provisionally made in late September, which investors were growing increasingly sceptical would not be finalised. (The cartel had 14 members until 30 November, but Indonesia left the group after it said it couldn't commit to lowering its crude output.)
The deal was the first for eight years and was bolstered by a second agreement, made earlier this month, with non-Opec oil producers. Led by Russia, this group of 11 countries signed up to cut production collectively by 558,000 bpd over the same period.
Saudi Arabia and Russia have taken the burden of both of these cuts, with Saudi committing to cutting 700,000 bpd of the Opec-agreed target and Russia taking a 300,000 bpd cut of the non-Opec producers' group.
Since 29 November, the last day before the major Opec agreement was announced, prices have risen around 20 per cent.
Both deals are part of efforts to stem a massive oversupply glut that has held back prices since 2014 and rebalance the market – though it's unclear exactly when that rebalancing will occur.
"There is a wide range of opinions out there on how successful the cuts will be," said Herman Wang, Opec specialist at S&P Global Platts.
"The International Energy Agency, in its most recent monthly oil market report, was rather bullish, saying that demand could outstrip supply in the first half of 2017 if the deal holds up. Opec itself says it expects the market to rebalance in the second half of 2017.
"The US Energy Information Administration has projected that if the agreement holds, global oil output led by US shale could rise faster than currently forecast and delay the market’s rebalancing until 2018."
Brent crude: A known unknown after the first quarter
While prices are expected to be flush at the beginning of next year, it becomes much more difficult to pin down what will happen towards the summer and second half of 2017.
"I think oil prices will continue to push higher in the first quarter of next year and I see Brent going north of $60 a barrel," Fawad Razaqzada, technical analyst at Forex.com, told City A.M.
"It becomes difficult to say what will happen thereafter because of two reasons. First, it is unclear whether the Opec will be able to stick to the plan and not exceed its self-imposed production quota. Second, it is the response from US shale producers to higher oil prices.
"The conventional wisdom is that they will respond by increasing their production because of higher prices. However they will be better off if they also restricted production in order to get rid of the excess supply quicker. So initially we may not see much of a response from US shale producers but if we get to the stage where there might be a deficit between demand and supply then we may see noticeable increases in US oil output, and probably from Opec too."
If shale producers up production because the price has increased, this could undercut many of the previous gains, compounding the list of "known unknowns" that could affect prices in the second half of the year.
"The key will be the response of US shale," Wang added.
"It is a faster and nimbler form of oil production than traditional oil drilling and is seen as much more price sensitive. That is, if prices rise to $60 a barrel or above, many analysts project that US shale production could come online very quickly and undo the price rise. This remains to be seen.
"The other side of the equation is demand response. It’s still unclear how oil demand will react if prices rise too high. If demand drops off as a result, the market rebalancing could be delayed."
A Trump effect?
Another factor in the US market that could drive up production is President-elect Donald Trump. It's unclear exactly what his plans are for the oil and gas market, though he has indicated he would like to slash energy regulation and ramp up production.
His appointments of former Texas governor Rick Perry to lead the department of energy and Exxon Mobil chief executive Rex Tillerson as secretary of state also hint that new oil and gas policies could be coming after his inauguration next month.