Crude oil
Crude oilReuters file

Global oil markets jumped more than 5 percent on Monday, with Brent hitting a 2016 peak above $40 a barrel, after Ecuador said it was holding a meeting of Latin American crude producers as OPEC sought a higher anchor price for oil.

Technically-driven buying in crude and a commodities rally also boosted oil. Industry data showing a smaller-than-expected build in stockpiles at the Cushing, Oklahoma delivery hub for U.S. crude futures was another supportive factor.

Oil has rallied more than 50 percent since hitting 12-year lows less than two months ago. The rally began after Russia and the Organisation of the Petroleum Exporting Countries floated the idea of a production freeze to support prices in an oversupplied market.

Ecuador's Foreign Minister Guillaume Long said his government will host a meeting in Quito on Friday with Venezuela, Colombia, Ecuador and Mexico "to reach consensus over oil, especially prices."

Separately, major OPEC producers are talking about a new oil price equilibrium of around $50, New York-based consultancy PIRA told Reuters.

"It's more confirmation that oil producers are close to achieving some kind of a deal on price support," said Phil Flynn, analyst at Price Futures Group in Chicago. "It's feeding bullish sentiment into a market that's turned 180 degrees from where it stood just weeks ago."

Brent LCOc1, the global crude benchmark, settled up $2.12 at $40.84. Its session peak was $41.04, the highest since Dec. 9. That was 51 percent above the 12-year low of $27.10 on Jan 20.

U.S. crude CLc1 finished up $1.98 at $37.90 a barrel, near a 2-month high. On Feb. 11, it hit a 2003 low of $26.05.

Some of the recent gains in oil were also helped by chart-related buying as Brent and U.S. crude breached multiple resistance levels between $30 and $38.

Asset rotation by investors have also led to higher allocations into commodities, along with equities. Gold and iron ore prices hit multi-month highs on Monday while Asian equities rose to two-month highs.

Hedge funds raised their bullish bets on Brent to a record high and on U.S. crude to a November peak during the week to March 1.

On the production front, U.S. shale oil output was expected to fall for a sixth month in a row in April, a government forecast said.

Some analysts said the global crude market remained oversupplied by around 2 million barrels per day and higher prices could prompt U.S. shale producers to swiftly add rigs they had cut.

Morgan Stanley noted the rally was also driven by dollar depreciation. "The upside should be limited by bloated global inventories and producer hedging," it said.