London: Oil prices hit 18-month highs on Tuesday, the first trading day of 2017, buoyed by hopes that a deal between Opec and other big oil exporters to cut production, which kicked in on Sunday, will drain a global supply glut.
Benchmark Brent crude jumped more than 2 per cent to a high of $58.37, up $1.55 a barrel and its highest since July 2015. By 1230 GMT, Brent had eased to $58.07, up $1.25.
U.S. light crude oil hit an 18-month high of $55.24, up $1.52 a barrel, also its highest since July 2015, before slipping to around $54.95. Oil futures exchanges were closed on Monday for New Year public holidays.
Jan. 1 marked the official start of a deal agreed by the Organization of the Petroleum Exporting Countries and other exporters such as Russia to reduce output by almost 1.8 million barrels per day.
“First signals suggest the Opec and non-Opec production cuts are raising hopes that the global oil oversupply will diminish," said Hans van Cleef, senior energy economist at ABN AMRO Bank N.V. in Amsterdam.
Ric Spooner, chief market analyst at CMC Markets, agreed: “Markets will be looking for anecdotal evidence for production cuts,” he said.
