Investing.com - Oil prices surged on Monday, hitting the highest levels since July 2015 after major oil producers reached a deal over the weekend to cut output in a bid to rebalance the oversupplied global market.
U.S. crude was trading at $54.01 a barrel at 10.39 ET, up $1.92 or 3.75% from its last close, after rising as high as $54.48 earlier.
Global benchmark Brent futures were at $56.27 a barrel, up $1.93 or 3.55%, off an intra-day high of $57.25.
The Organization of the Petroleum Exporting Countries and non-OPEC producers, including Russia, on Saturday reached their first deal since 2001 on coordinated production cuts to rein in oversupply and drive prices higher.
Producers from outside OPEC agreed to cut output by 558,000 barrels per day, short of the initial target of 600,000 bpd, but still the largest ever output cut by non-OPEC nations. Of that, Russia will cut 300,000 bpd.
The agreement came after OPEC late last month announced plans to cut output by 1.2 million barrels per day from January 1.
Oil prices received an additional boost after top OPEC exporter Saudi Arabia indicated that it may be prepared to make deeper cuts than the 486,000-barrel cut it had originally pledged in the November 30 meeting.
Oil prices have climbed above $50 a barrel since OPEC agreed on its first production cut since 2008 aimed at propping up prices after a two year slump.
Oil production has been outstripping consumption by between one to two million barrels per day since late 2014.
But doubts have emerged over how effective the cuts will be at rebalancing the market with some analysts skeptical on the ability of major producers to adhere to output limits.
Some analysts have also warned that the cuts are likely to cause other producers, particularly U.S. shale drillers, to quickly ramp up output as prices rise.