Oil prices strengthened Monday with the main international contract moving above $40 US for the first time since December on predictions that OPEC will set a new floor for oil prices.

Brent oil, the international contract traded in London, was soared more than 5.4 per cent to $40.77 US a barrel. West Texas Intermediate, the main North American contract, was up 5.8 per cent at $37.97 US a barrel after spiking above $38 in afternoon trading.

Higher oil prices helped push Toronto stocks higher, with the TSX up 171 points at 13,384.

The TSX has been moving higher for eight days as the energy sector and gold recovers.

The Canadian dollar was stronger at 75.29 cents US.

Gary Ross, a leading oil price prognosticator at New York-based consultancy PIRA, has told Reuters he believes oil prices will rise to about $50 by the end of the year.

Ross is among a number of analysts who believe that oil prices bottomed out in January, when they sank below $30 a barrel.

He has hopes for a planned meeting after March 20 between members of the Organization of Petroleum Exporting Countries and Russia that could lead to a continued freeze in output.

OPEC could be ready to set a floor

He believes OPEC would like to set a $50 US a barrel floor for oil, as its members are suffering economically from low prices. That could mean some production cutbacks as the year goes on, or possibly a strategy of waiting for demand to rise as low prices encourage consumption.

"They want $50 oil, this is going to become the new anchor for global oil prices," he said.

"While it may not be an official target price, you'll hear them saying it. They're trying to give the market an anchor."

Though oil has been rising steadily in price for three weeks, there is still a record amount of oil in storage around the world.

That means many analysts are much less optimistic about a continued rise in prices.

What about the glut?

"The past days' oil price rally was from our perspective less related to a shift in fundamentals but a recovery of sentiment," said Norbert Ruecker, head of commodities research at Julius Baer.

"We still believe that oil prices experience a short-term bounce but no long-term recovery" due to increased production from Iran and resilient U.S. output, he added in a note to clients.

There is fear U.S. rigs will come back into service if prices rise above $40.

However, the Baker Hughes rig count released Friday shows the number of U.S. oil and gas rigs fell by 13 to 489, with more than 700 rigs idled in the past year as prices tanked. The number of Canadian rigs was down 46 to 129, with 171 rigs shut down in the past year. 

With files from Reuters