Oil prices rose on Monday to their highest levels in about 18 months after OPEC and non-OPEC producers agreed to cut oil output to ease the global glut of supplies and prop up markets.
The deal between OPEC and a number of other oil producing nations was the first joint action since 2001 after more than two years of low prices.
Reuters reported that Brent futures for February delivery rose 4.4% to $56.72 per barrel, with US crude rising 4.8% to $53.98 per barrel in Asian trade.
“We have seen OPEC and non-OPEC producers agreeing, which is also boosting reflation expectation around the world,” Chris Weston, an institutional dealer with IG Markets, told Reuters.
Goldman Sachs said: “We believe that the observation of the OPEC-11 and non-OPEC 11 production cuts is required to sustainably support … oil prices to our 1H17 WTI price forecast of $55 a barrel.”
OPEC has said it plans to cut output by 1.2 million bpd from January 1, while producers from outside OPEC have now agreed to reduce output by 558,000 bpd.
“Non-OPEC participation should add to bullish sentiment,” Morgan Stanley said.