Saudi Arabia has decided rein back its production of crude oil next month, which has lifted oil prices out of their bear-market slump.

At a joint meeting of Opec and non-Opec oil ministers in Abu Dhabi on Sunday, Saudi Arabia said it would cut oil production by 500,000 barrels a day in December than in November.

Saudi energy minister Khalid Al-Falih told reporters that he was going to “work hard to balance the market within a reasonable corridor”.

On Monday confirmed that the kingdom will pump half a million barrels less in December, due to falling demand, also citing technical analysis that shows that production should actually be cut by one million barrels per day.

The price of Brent crude oil, having sunk to 7-month lows at just above $69 over the weekend, was up 2.3% to $71.8 a barrel on Monday morning.

"In the short term this is a positive for oil, but we must question the impact longer term unless it’s the sign of more to come from OPEC," said Neil Wilson at Markets.com. "Saudi Arabia cannot act alone though – realistically it needs to pull together OPEC allies and, critically, Russia to curb production if it wants prices to hold. The language from Russia suggests it is not ready to follow the Saudis yet."

With the US measure of crude prices, West Texas Intermediate, up 1.6% to $61.13, analyst Naeem Ahmed at Think Markets added: "We are seeing investors taking advantage of the overselling of the oil price in the recent weeks and a corrective move is strongly on the card. The current momentum could push the oil price towards the $62.50 and a break of this would open the floor towards the next resistance of $63.20."

Source: Web Financial Group