Crude gained almost 12% last week after the Organization of the Petroleum Exporting Countries agreed to pull back output.
Oil prices edged up Monday, building on last week’s sharp rally brought on by an OPEC deal to cut production.
Brent crude, the global oil benchmark, rose 1.14% to $55.08 a barrel on London’s ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading up 1.14% at $52.27 a barrel.
Crude prices gained almost 12% last week after the Organization of the Petroleum Exporting Countries agreed to pull back output by 1.2 million barrels a day. Investors are now waiting for the outcome of a Dec. 10 meeting between the cartel and non-OPEC producers such as Russia, which will also focus on production limits.
Russia has said its willing to participate in the OPEC deal. But Moscow has failed to follow through on similar agreements in the past.
“The market is still trying to digest what will happen when OPEC implements its agreement to cut production and the outcome of the meeting this week with non-OPEC countries,” said Eugen Weinberg, head of commodity research at Commerzbank AG.
The OPEC deal is set to take effect in January, though questions remain over the deal’s enforcement and whether non-OPEC members will stick to the deal.
OPEC expects producers from outside the cartel, including Russia, to join with additional cuts totaling 600,000 barrels a day.
“I would be surprised to see any significant action on this side,” Mr. Weinberg said. “Russia is the ultimate beneficiary of this deal because not only do they benefit from the higher oil price but also from the market share they can take from OPEC.”
Russia increased its oil production to a record 11.2 million barrels a day in November.
Since Moscow has indicated that any production cut would be based on the November level, the country would still be producing significantly more crude oil in the first half of 2017 than it was just a few months ago, said Commerzbank in an analyst note.
Nymex reformulated gasoline blendstock–the benchmark gasoline contract–rose 2.39% to $3.52 a gallon. ICE gas oil changed hands at $481.50 a metric ton, up $7 from the previous settlement.