Oil stocks are going nuts over reports of an OPEC deal to cut output

Crude oil explorers and producers were the biggest gainers on the benchmark S&P 500 index on Tuesday.

Their stocks gained amid reports that the Organization of Petroleum Exporting Countries (OPEC) agreed to cut oil output in a bid to lift prices that last year sank to seven-year lows because of oversupply.

Crude oil prices also soared in anticipation of an agreement to lower output, which would be the first since 2008. West Texas Intermediate crude oil, the US benchmark, gained by as much as 7% to $48.58 per barrel. Brent crude, the international benchmark, jumped 8% and above $50 per barrel to as high as $51.40.

In mid-morning trading in New York, Marathon Oil was tbe biggest gainer on the S&P 500, up by 15%. Newfield Exploration, Hess, and Devon Energy were also among the best performers. Overall, the energy sector was by far the biggest leader on the index, up by nearly 4%.

Chevron and Halliburton were among the energy companies whose shares rose to new 52-week highs.

Bloomberg reported that an unnamed delegate to the OPEC meeting said output will be cut by 1.2 million barrels per day to 32.5 million per day. A source told Reuters that the United Arab Emirates, Kuwait and Qatar were expected to cut output by a combined total of about 300,000 barrels per day.

OPEC's deal is a step toward normalizing the market's oversupply, although it remains to be seen whether the member countries will stick to their agreement.