The price of West Texas Intermediate (WTI) crude oil rose to an 18-month high this morning, as a deal between Opec countries continued to boost the market.
WTI crude rose 2.5 per cent to $55.06 in early trading, its highest since July 2015. That pushed the price of Brent crude up 2.4 per cent to $58.19.
Oil began to climb in late November, when Opec, the world's largest oil cartel, agreed to cut production by 1.2m barrels per day in the first six months of 2017.
However, just before Christmas the black stuff was hit by a surprise rise in US stockpiles: data from the American Petroleum Institute showed a 4.2m barrel increase in inventories in the week to 23 December.
Today's rise in prices pushed up BP, whose shares rose 1.3 per cent to 516.2p in mid-morning trading. Shell's A shares rose 0.5 per cent to 2,252.75p.
Figures published by Markit this morning showed UK manufacturing had risen in December - but suggested higher oil prices will begin to squeeze costs for the sector.
"The weakened pound is substantially pushing up manufacturers’ prices for oil, commodities and imported inputs – which is squeezing margins and increasing pressure to hike prices," said Howard Archer, chief European and UK economist at IHS Markit.
"Indeed, latest Office for National Statistics data show that producer input prices were up 12.9 per cent year-on-year in November."