Oil prices hit 18-month highs on Tuesday, the first trading day of 2017, buoyed by hopes that a deal between OPEC and non-OPEC members to cut production, which kicked in on Sunday, will drain a global supply glut.

Benchmark Brent sweet crude LCOc1 jumped more than two per cent to a high of 58.37 dollars, up 1.55 dollars a barrel and its highest since July 2015.

U.S. light crude oil CLc1 hit an 18-month high of 55.24 dollars up 1.52 dollars a barrel, also its highest since July 2015.

Oil futures markets 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 (bpd).

“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.

Libya, one of two OPEC countries exempt from the output cuts, has increased its production to 685,000 bpd, from around 600,000 bpd in December, an official at the National Oil Corporation said on Sunday.

Elsewhere, non-OPEC Middle Eastern oil producer Oman told customers last week that it would cut its crude oil term allocation volumes by 5 per cent in March.

Non-OPEC Russia’s oil production in December remained unchanged at 11.21 million bpd, near a 30-year high, but it was preparing to cut output by 300,000 bpd in the first half of 2017 in its contribution to the accord. (Reuters/NAN)