US crude on Monday traded above $40 a barrel for the first time since early March, as the market reacted positively to the extension, before selling off later in the session.
Global benchmark Brent broke past $43 per barrel for the first time since early March on Monday after major crude exporters made a decision to keep record production curbs in place until the end of July.
The Organization of Petroleum Exporting Countries (OPEC) and its allies on Saturday agreed to extend oil production cuts by one month.
Crude markets have tightened since the OPEC+ alliance agreed in April to make unprecedented cuts in output as demand plunged amid the coronavirus.
"When you have Brent approaching $40, it is a good sign", one OPEC delegate said. The dragon nation's purchases hit a record high of 11.3 million barrels per day in May.
The OPEC+ agreement calls for laggards such as Iraq to cut by levels above and beyond their agreed production number to compensate for falling short previously.
OPEC, allies agree to extend oil output cuts by 1 month
But some analysts wonder whether this is the result of genuine consumption or just opportunistic buying from Chinese refiners given the all-time low prices in crude oil.
Even as oil prices recovered, they are still well below the costs of most US shale producers, leading to shutdowns, layoffs and cost-cutting in the world's largest producer. A political deadlock in the country has further complicated production cuts.
In the United States, the oil rig count has declined for the twelfth consecutive week, according to the latest data released by oilfield services company Baker Hughes on Saturday.
As OPEC met virtually over the weekend, Tropical Storm Cristobal was swirling over the Gulf of Mexico.
Also, cheap oil prices in the global market are further expected add to the benefits.
"The nature of the OPEC+ deal is not the golden bullet solution that it is advertised to be", said Robert Yawger, director of the futures division at Mizuho Securities USA, in a note to clients Monday afternoon.
"These adjustments are in the interest of oil market stability", it added.
Britain will not 'look away' from Hong Kong responsibilities, says Raab
Some cities have seen arson and looting, and across the nation police have been criticised for using excessive force. The move came amid increasing federal action targeting IP theft at USA research and academic institutions.