Brent crude oil prices have jumped to their highest level in more than two years following a meeting of the Organisation of the Petroleum Exporting Countries (Opec) at which producers said the market was rebalancing.
Global benchmark Brent crude futures rose 2.69 per cent to $58.39 per barrel while US benchmark West Texas Intermediate traded up 2.19 per cent at $51.77 per barrel at the time of writing. Prices have shot up about 15 per cent in the past three months.
Opec and non-Opec members including Russia met in Vienna last week to discuss their deal to cut production by about 1.8m barrels per day (bpd), which runs to the end of March 2018. The cartel aims to reduce the global supply glut and prop up oil prices which plunged in 2014.
Essam al-Marzouq, Kuwait's oil minister and chair of the meeting of the Joint Ministerial Monitoring Committee, said output curbs had helped cut global crude inventories to their five-year average, according to Reuters, which was Opec's stated target.
"The uptrend in oil prices it taking another leg higher after the Opec meeting on Friday reported high compliance with output cuts and implied an extension of the cuts beyond March," said Jasper Lawler, head of research at London Capital Group.
"Oil ministers were patting themselves on the back in Vienna, and perhaps rightly so. High compliance with its production cuts mean Opec has played its part in reducing the global supply glut. The more favourable supply-demand dynamic could see Brent crude reach $60 per barrel and two-year highs this year."
Opec has had to contend with rising US shale production offsetting its cuts in recent months, but US energy firms reduced the number of oil rigs operating for a third week in a row last week, bringing a 14-month drilling recovery stuttering to a stop.
Read more: Oil prices rise as Opec cuts production