Brent crude prices climbed past the $58 per barrel mark on Tuesday as traders anticipate planned OPEC production cuts.
Brent crude was trading at $58.03 per barrel about an hour after Tuesday’s opening bell, up from a previous close of $56.82 per barrel and well-above the year-ago level.
West Texas Intermediate (WTI) rose to $54.90 per barrel from a previous close of $53.72 per barrel.
OPEC and a group of 14 non-OPEC producers, including Russia, are expected to begin implementing production cuts this month.
OPEC members agreed in December that the group will trim production by 1.2 million bpd to 32.5 million bpd.
Following the OPEC deal, a group of non-OPEC producers agreed to reduce their overall production by 558,000 bpd.
OPEC said the non-OPEC reductions can either be done voluntarily or through managed decline, in accordance with an “accelerated schedule.”
Both production cut plans will begin on January 1 and will be effective for an initial duration of six months.
The International Energy Agency said in December that global oil inventories could decline faster than anticipated if OPEC and non-OPEC producers deliver on the cuts.
The agency added that, for contractual and logistical reasons, the output cuts may not immediately “fall neatly into place.”
“The price curve reflects this with a sharp increase in short-term prices but shows relatively little movement further out,” the IEA said last month.
A recent survey conducted by the Dallas Federal Reserve found that respondents were more bullish about one-year ahead oil prices than they were in third quarter.
However, 58 percent of respondents to the Fed’s survey said they believe OPEC will not be able to enforce the reduced production target.
As crude prices have risen from multi-year lows seen in January U.S. producers have begun adding rigs and boosting production.
The U.S. Energy Information Administration found that U.S. crude oil production rose 2.7 percent in October to about 8.8 million bpd but was still down by about 6 percent from year-ago levels.