Oil price improves to 18-month high

Oil prices climbed to an 18-month high yesterday, the market’s first trading of the year.

According to analysts, the high was based on hopes that OPEC (Organization of Petroleum Exporting Countries) and non-OPEC producers would maintain the cut deal to boost oil prices.

The cut promised by both parties kicked off on Sunday, with production from OPEC and non-OPEC members being reduced by almost 1.8 million barrels per day.

Benchmark Brent crude LCOc1 climbed more than 2 percent to a high of $58.37, up $1.55 a barrel and its highest since July 2015. By 0940 GMT (4:40 a.m. ET), Brent eased slightly to trade at $58.22, up $1.40.

“First signals suggest the OPEC and non-OPEC production cuts are raising hopes that the global oil oversupply will diminish,” Hans van Cleef, senior energy economist at ABN AMRO Bank N.V. in Amsterdam told Reuters.

Ric Spooner, chief market analyst at CMC Markets, agreed: “Markets will be looking for anecdotal evidence for production cuts,” he said. “The most likely scenario is OPEC and non-OPEC member countries will be committed to the deal, especially in early stages.”