Crude oil prices jumped more than 2% on Monday after Saudi Arabia and Russia agreed to keep production cuts in place into 2018.
The energy ministers of both countries – the world's two leading oil producers – said that current output curbs should be extended until March 2018.
At a briefing in Beijing, Khalid al-Falih and Alexander Novak said in a joint statement: "There has been a marked reduction to the inventories, but we're not where we want to be in reaching the five-year average."
The two ministers continued: "We've come to the conclusion that the agreement needs to be extended."
Saudi Arabia, the de facto leader of oil cartel Opec would like to see oil prices closer to $60 a barrel, but high inventories and rising output from US shale oil producers have kept prices in a range below this level for much of the last year.
More recently, bearish US inventory data and reports that other Opec members were failing to comply with existing output cuts, drove crude prices below $50, with Nymex West Texas Intermediate falling to a two-month low of $47.66 last week.
Ole Hansen, head of commodity strategy at Saxo Bank, said: "It is still too early to call an end to the latest sell off but with a heavy build-up in speculative selling during the past few weeks further gains could become self-feeding as sold positions are covered."
A continuation of the output cuts could be sealed at an Opec meeting on 25 May. While Russia is not an Opec member, as a participant in the original cuts, its representative will be present at the meeting.
On Monday, Nymex WTI climbed 3% to $49.27 a barrel, while Brent crude gained 2.6% to $52.16.
Oil stocks rally
The news also drove shares in oil producing companies higher. On London's FTSE 100, BP gained 1.6% to 467.2p, while Royal Dutch Shell added 1.3% to £22.21. France's Total rose 1.3% to €48.59 and Spain's Repsol added 1.1% to €14.81.
Biraj Borkhataria, energy sector analyst at Royal Bank of Canada, was positive on the oil sector: "We think the majors can hold the fort over the next few years at lower oil prices."
"That said, should a 'lower forever' scenario play out, we believe dividends would need to be rebased, and progressive payout policies would need to be rethought."