Published: Oct 4, 2016 6:28 a.m. ET

Early week rally was sparked by optimism over OPEC production progress

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Oil futures pulled back from three-month highs in trading Tuesday following a rally fueled by rising optimism over a possible OPEC supply deal.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in November CLX6, +0.10%  traded at $48.48 a barrel, down 33 cents, or 0.7%, in the Globex electronic session. December Brent crude LCOZ6, +0.35% on London’s ICE Futures exchange fell 29 cents, or 0.6%, to $50.60 a barrel.

Prices eased following a sharp push higher during New York trading hours Monday. The Nymex contract settled at a three-month high of $48.81, while Brent crude rose to $50.89, its highest level since Aug. 18.

Oil prices had rallied sharply in the last week following a much-touted agreement at an informal meeting in Algiers of the Organization of the Petroleum Exporting Countries. The group’s oil ministers agreed on a need to cut production and are expected to hammer out the final details of any such agreement at their next official meeting Nov. 30 in Vienna.

Prior to these developments, the inability by OPEC to reach consensus over a production ceiling had been one of the driving forces behind a more than two-year-long slump in oil prices. Indications that Russia, which is not in OPEC, planned to join any supply agreement was also helping to fuel the recent recovery.

“We have to remember that the Russians and Saudis found an accord prior to the Algiers meeting, so there’s obviously a very strong will to carry out the agreement,” said Stuart Ive, private client manager at OM Financial.

He added that OPEC members also have a financial incentive to strike an accord: “Oil producing nations really have become so cash-strapped that there’s a real driving force to see this through.”

Nymex reformulated gasoline blendstock for November RBZ6, +1.20%  — the benchmark gasoline contract — rose 74 points to $1.4779 a gallon, while November diesel traded at $1.5511, 21 points lower.

ICE gasoil for October changed hands at $452 a metric ton, up $3.75 from Monday’s settlement.