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Oil Prices Hit 6-Week Highs Buoyed by Optimism on Output Cut Extension

Investing.com -- Oil prices rose to their highest levels in six weeks on Tuesday, bolstered by hopes that OPEC and its allies may agree to extend an agreement to curb output in order to support prices.

International benchmark Brent was up 55 cents at $63.16 a barrel by 08:23 AM ET (12:23GMT), its highest level since Aug. 1. Crude oil WTI futures were up 56 cents, or 1.0%, at $58.42 a barrel, its highest since July 31.

Prices were on track for a fifth straight day of gains after Saudi Arabia's new energy minister on Sunday reiterated a commitment to production cuts by the OPEC+ alliance, made up of the Organization of the Petroleum Exporting Countries and non-OPEC producers, including Russia.

He said the kingdom's policy would not change and a global deal to cut oil production by 1.2 million barrels per day would be maintained. He added that the alliance would be in place for the long term.

"Clearly, the Kingdom wants higher oil prices ... Prince Abdulaziz made clear that 'no radical' change in the Saudi oil policy is forthcoming", said Tamas Varga of oil brokerage PVM.

"It will be interesting to see if we get any hint from him whether the producer group in general and Saudi Arabia in particular sees the need for deeper production cuts".

The OPEC+ joint ministerial monitoring committee (JMMC), which reports on compliance with the cuts, is due to meet on Thursday in Abu Dhabi.

There have been concerns about producers' adherence to the agreement as OPEC members Iraq and Nigeria, among others, exceeded their quota in August and Russia also did not fully comply.

"Markets will need to see concrete progress on the production front, even as the world's economy slows, to sustain gains," said Jeffrey Halley, senior market analyst at OANDA.

Should oil markets close higher on Tuesday it will be the longest run of gains since late July but headwinds remain due to U.S.-China trade tensions.

The American Petroleum Institute is due to release its weekly oil inventory report later Tuesday, after a surprise inventory build last week surprised analysts. The U.S. Energy Information Administration report on crude oil inventories is due to be released on Wednesday.

--Reuters contributed to this report

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