Oil prices climbed on Monday, pushing futures to their highest levels in more than a month, as expectations grow for an extension to the OPEC-led production cut agreement into the first quarter of next year.
June West Texas Intermediate crude tacked on 32 cents, or 0.6%, at $50.64 a barrel.
The contract expires at the session’s end, with July crude which traded at $51.04, up 37 cents, or 0.7%, set to become the front-month contract. July Brent crude LCON7, +0.65% the global benchmark, rose 24 cents, or 0.5%, to $53.85 a barrel.
Major oil producers will join members of the Organization of the Petroleum Exporting Countries in Vienna this week to discuss extending the six-month agreement to cut production by 1.8 million barrels a day set to expire in June.
There is near-unanimity among watchers that the deal will be extended, with the only real questions being for how long and whether cuts will be more severe.
News reports Monday said that Saudi Arabia and Iraq together back a nine-month extension to the OPEC output cuts. Saudi Arabia’s Energy Minister Khalid al-Falih has also said that he does not expect any OPEC opposition toward a nine-month extension, according to Reuters.
Sentiment regarding a new deal has helped oil rebound 10% over the past two weeks.
The Saudis have “voiced that an extension of cuts [by] nine months is essentially in place,” said Bill Baruch, chief market strategist at iiTRADER. “We feel that much of this price action is a potential buy the rumor sell the fact.”
Gains on Monday may also be attributed to the “June contract falling off the board,” he added.