By Alison Sider, Christopher Alessi and Stephanie Yang 

Oil prices are poised to return to bull-market territory Monday after a slow, laborious climb from their slide three months ago.

U.S. crude futures are trading 22% above this year's low of $42.53 on June 21.

West Texas Intermediate, the U.S. benchmark, rose $1.03, or 2.03%, to $51.69 a barrel on the New York Mercantile Exchange. U.S. crude hasn't settled above $51 a barrel since May.

Brent, the global benchmark, was up $1.50, or 2.64%, at $58.36 a barrel, trading at its highest level this year.

The shift has been triggered by renewed confidence that the Organization of the Petroleum Exporting Countries will continue cutting production and that its efforts are helping to drain a supply glut that has weighed on prices for more than three years. A drumbeat of bullish data in September, including the International Energy Agency's upward revision to its demand forecast, have helped lift prices in recent weeks.

"It looks as though the market started to get convinced that the rebalancing is actually happening," Tamas Varga, an analyst at PVM Oil Associates Ltd. said in a note Monday.

Iraqi Kurdistan's independence referendum Monday also played a role in boosting prices Monday, analysts said. Prices rose after Turkish president Tayyip Erdogan made a veiled threat to close the pipeline that allows Kurdish oil to reach the global market.

OPEC and 10 producers outside the cartel, including Russia, first agreed late in 2016 to cap their production at around 1.8 million barrels a day lower than peak October 2016 levels, with the aim of alleviating global oversupply and boosting prices. The deal was extended in May through March 2018.

Over the past few weeks, a number of signatories to the deal have indicated a willingness to hold back production potentially through 2018.

The group is moving to restrain output from Nigeria and Libya, members that were initially left out of the deal because their oil industries were crippled by civil unrest that was expected to tamp down production there. But an unanticipated surge in output from those two countries has been undermining the OPEC deal's effectiveness.

Nigeria's oil minister said Friday that the country would be willing to cap its output, albeit at a higher level than it is currently producing.

"A little bit of OPEC rhetoric leaned toward the friendly side with the potential-slash-possibility of an OPEC extension, and maybe being able to reel the Nigerians and Libyans in a little bit. This is comforting to the bulls," said Donald Morton, senior vice president of Herbert J. Sims & Co., who oversees an energy trading desk.

For much of the year, market participants were skeptical of OPEC's efforts. And it seemed nothing could stop the relentless increase in U.S. output. Traders and investors have been wary of oil prices rising above $50 a barrel, anticipating that higher prices will incentivize U.S. shale producers to start pumping out more crude.

But recently, market participants have been encouraged by signs that shale activity is starting to level off.

At the same time, demand has been strong. The International Energy Agency earlier this month raised its forecast for demand growth this year and now expects an increase of 1.6 million barrels a day.

"The combination of very strong demand, potential greater cohesion among OPEC and growing pains for shale" suggests that the global oil benchmark will maintain its bullish tilt, analysts at Goldman Sachs wrote in a research note.

Fuel prices are also rising as U.S. refineries come back online in the wake of Hurricane Harvey, providing boost to crude prices.

Gasoline futures rose 4.52 cents, or 2.71%, to $1.7136 a gallon. Diesel futures rose 2.92 cents, or 1.61%, to $1.8455 a gallon.

Benoit Faucon contributed to this article

Write to Alison Sider at alison.sider@wsj.com, Christopher Alessi at christopher.alessi@wsj.com and Stephanie Yang at stephanie.yang@wsj.com

(END) Dow Jones Newswires

September 25, 2017 12:18 ET (16:18 GMT)