Brent Crude above USD 40

Brent crude oil prices jumped to a 2016-high during Monday's session, as optimism rose that major producers might reach a price support deal and investors opened new bets on future price rises. Further it remained over USD 40 a barrel in early trade on Tuesday.

U.S. oil prices have climbed 45 per cent off a 13-year low reached in February, as investors have focused on talks among producing nations about freezing output and expectations that U.S. production will keep falling. Brent hit its highest level since December and reached USD 2.12, an increase of 5.5 percent, to settle at USD 40.84 a barrel, while US crude rose to USD 1.98, an increase of 5.5 percent, to settle at USD 37.90 on New York Mercantile Exchange.

Oil markets first gained traction last Friday after Russia’s Energy Minister said that a meeting between the Organisation of Petroleum Exporting Countries (OPEC)  group and other leading oil producers about freezing output could take place between 20 March and April. Late on Monday South American producers also said they would meet to talk about an action for supporting prices.

Until late February, traders held near record amounts of short positions that were betting on further price falls, but sentiment has since flipped, indicating that the market increasingly thinks that prices have bottomed out.

The combined net long position in West Texas Intermediate (WTI) and Brent futures and options was boosted by more than 61 million barrels last week to the highest level in nine months.

As Brent crude oil prices jumped to a 2016 high and due to an increase in optimism that major producers might reach a price support deal in India, the stocks of oil drilling and exploration companies are trading in green. Some of the stocks which are surging are Oil and Natural Gas Corporation (ONGC) which surged 2.56 per cent; GAIL surged around 2 per cent; Petronet LNG is up 1.43 per cent; Oil India and Cairn India are surging 2.48 and 5.70 per cent, respectively, above their previous closing price.