Investing.com - Oil prices were sharply higher on Tuesday, as upbeat comments from Saudi Arabia's oil minister added to optimism that major oil producers are sticking to their pledge to cut back output as part of a deal to curb global oversupply.
Crude oil for February delivery on the New York Mercantile Exchange jumped $1.04, or around 2%, to $53.41 a barrel by 9:40AM ET (14:40GMT). Markets in the U.S. were closed Monday for a public holiday.
Elsewhere, Brent oil for March delivery on the ICE Futures Exchange in London rose 97 cents, or about 1.8%, to $56.83 a barrel, after gaining 41 cents, or 0.74%, on Monday.
Saudi Arabian Energy Minister Khalid al-Falih said on Monday that the kingdom will adhere strictly to its commitment to cut output under a global agreement, expressing confidence that OPEC's plan to prop up prices would work.
Speaking to reporters on the sidelines of an industry event in Abu Dhabi, Falih added that OPEC and non-OPEC producers are unlikely to extend their agreement to cut oil output beyond six months, citing the level of compliance with the deal and the rebalancing of the market.
Meanwhile, OPEC Secretary-General Mohammed Barkindo forecast on Monday that stability would return to oil markets this year while price hawk Venezuela said it hoped its crude basket would rise to $70 in coming months.
January 1 marked the official start of the deal agreed by OPEC and non-OPEC member countries such as Russia in November last year to reduce output by almost 1.8 million barrels per day for the next six months.
The deal, if carried out as planned, should reduce global supply by about 2%.
However, some traders remain skeptical that the planned cuts will be as substantial as the market currently expects.
While some major oil producers, such as Saudi Arabia and Kuwait, have so far showed signs that they are sticking to their pledge to cut back output, others, such as Libya have ramped up production.
OPEC plans to release its monthly oil report on Wednesday, while the International Energy Agency’s monthly report is due the day after, as traders look for further evidence that oil producers are adhering to planned output cuts.
Elsewhere on Nymex, gasoline futures for February ticked up 2.9 cents, or 1.8% to $1.651 a gallon, while February heating oil added 3.8 cents, or 2.3%, to $1.689 a gallon.
Natural gas futures for February delivery shed 3.6 cents, or about 1%, to $3.381 per million British thermal units.