The oil price has doubled in a year. Here's why

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Trump signs executive actions for oil pipelines

Trump signs executive actions for oil pipelines

It's a good day for OPEC.

The data released by the oil cartel on Monday show that its members have largely followed an agreement to reduce production.

The confirmation concludes a remarkable year for OPEC, which was forced to set up a price increase plan after falling to $ 26 a barrel in February 2016.

The fall in prices, which has not been seen since 2003, was caused by a month-long oversupply, a weakening demand from China and a decision by the Western powers to lift Iranian nuclear sanctions.

Since then the market has seen an impressive turnaround. Crude oil prices doubled to $ 53.50 a barrel.

Here's how major oil producers worked together to raise prices:

OPEC Deal

OPEC agreed to significant cuts in production in November, hoping to tame the global oversupply of oil and support prices.

News of the deal immediately increased prices by 9%.

Investors cheered even more after several non-OPEC manufacturers, including Russia, Mexico and Kazakhstan, joined efforts to limit supply.

The key is that the deal is stuck. The OPEC report released on Monday showed that its members have largely met their commitments to reduce production. The International Energy Agency agrees: it estimated compliance with OPEC at 90% in January.

UAE Minister of Energy Suhail Al Mazrouei told CNNMoney on Monday that the results were even better than expected.

Production cuts a total of 1.8 million barrels a day and is expected to last six months.

Related: OPEC has made one of its “deepest” cuts in production

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Investors are optimistic

It took months for the OPEC deal to be negotiated, and investors really liked it. The number of hedge funds and other institutional investors who opt for higher prices reached a record high in January, according to OPEC.

Widespread optimism is helping prices to rise.

Higher demand

The latest data from OPEC and the IEA show that global oil demand in 2016 was higher than expected in the last quarter of the year due to stronger economic growth, higher vehicle sales and colder weather than expected.

Demand is expected to continue to grow to an average of 95.8 million barrels per day in 2017, compared to 94.6 million barrels per day in 2016.

The IEA said that if OPEC upholds its agreement, the global oil spill that has plagued the markets for three years will finally disappear in 2017.

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What's next?

Despite the astounding growth, analysts warn that prices could not go much higher.

Because higher oil prices are likely to lure American shale producers back onto the market. The total number of active oil rigs in the United States was 591 last week, according to Baker Hughes, 152 more than a year ago.

According to the OPEC report, US crude oil stocks rose to nearly 200 million barrels in January, above their five-year average.

"This huge increase in inventories is the result of a strong response from US shale producers who were not part of the OPEC agreement and instead used the resulting price recovery to increase production," said Fiona Cincotta, analyst at Stadtindex.

More offers could put OPEC under pressure again.

CNNMoney (London) First published on February 13, 2017: 9:13 AM ET