SINGAPORE - Oil prices rose on Monday, extending gains from Friday when producer club OPEC and some non-affiliated producers agreed a supply cut of 1.2 million barrels per day (bpd) from January.
Despite this, the outlook for next year remains muted on the back of an economic slowdown.
International Brent crude oil futures were at $62.21 per barrel at 0218 GMT, up 54 cents, or 0.9 percent, from their last close.
Prices surged on Friday after the Organisation of the Petroleum Exporting Countries (OPEC) and some non-OPEC producers including heavyweight Russia announced they would cut oil supply by 1.2 million bpd, with an 800,000 bpd reduction planned by OPEC-members and 400,000 bpd by countries not affiliated with the group.
U.S. West Texas Intermediate (WTI) crude futures were at $52.63 per barrel, up 2 cents, held back as the booming U.S. oil industry is not taking part in the announced cuts.
The OPEC-led supply curbs will be made from January, measured against October 2018 output levels.
"Our key conclusion is that oil prices will be well supported around the $70 per barrel level for 2019," analysts at Bernstein Energy said on Monday.
Despite the cuts, that was still a price forecast reduction of $6 per barrel as Bernstein reduced its crude oil demand forecast from 1.5 million bpd previously to 1.3 million bpd for 2019.
U.S. bank Morgan Stanley said the cut was "likely sufficient to balance the market in 1H19 and prevent inventories from
It added that it expected "Brent to reach $67.5 per barrel by 2Q19, down from $77.5 before."
Oil prices have been pulled down sharply since October by signs of an economic slowdown, with Brent losing almost 30 percent in value.
Japan, the world's third biggest economy and No.4 oil consumer, on Monday revised its third quarter GDP growth down to an annualised rate of -2.5 percent, down from the initial estimate of -1.2 percent.
Meanwhile the two world's biggest economies, the United States and China, are locked in a trade war which is threatening to slow global growth and battering investor sentiment.
Despite the expectations of a slowdown, physical demand on the ground remains healthy.
China, the world's biggest oil importer, over the weekend reported an annualised 8.5 percent jump in November crude imports, to 10.43 million bpd, marking the first time China imported more than 10 million bpd. That leaves the world's second-biggest economy on track to set yet another annual import record.
Strong demand is being driven by Chinese purchases for strategic reserves, but also by new refineries, triggering excess supply of fuels, filling up storage tanks and eroding refinery profits across Asia.