Oil futures climbed in early trade on Tuesday, boosted by an unexpected commitment from Saudi Arabia to deepen production cuts in June to assist drain the glut within the global market that has grown because the coronavirus pandemic crushed fuel demand.
Brent crude LCOc1 futures climbed to a high of about $30.11 a barrel and were up 0.9%, or 28 cents, at $29.91 at 0021 GMT, clawing back some of the previous session’s losses. The benchmark fell $1.34 on Monday.
U.S. West Texas Intermediate (WTI) crude CLc1 futures were up 1%, or 24 cents, at $24.38 after touching a high of $24.77.
Saudi Arabia told overnight it would cut production by a further 1 million barrels per day in June, slashing its total production to 7.5 million bpd, down nearly 40% from April. OPEC+ is a grouping comprising members of the Organization of the Petroleum Exporting Countries (OPEC) and the other producers including Russia.
The United Arab Emirates and Kuwait also committed to cut production further, promising to cut another about 180,000 bpd altogether. cuts, combined with the world’s biggest economies relaxing coronavirus restrictions and stoking a gradual recovery in fuel demand, are expected to ease some pressure on crude storage capacity.
Although, in the wake of new pandemic situation of the corona virus that including in China and South Korea, the market is wary of a second wave of COVID-19 cases that could give result in new lockdowns and stall a recovery in demand.
As he said – “The majority of traders’ top-line view is that inventories will increase at a slower pace but will still build, capping oil prices within the medium term,” .
U.S. crude inventories likely rose by about 4.3 million barrels within the week to May 8, a preliminary Reuters poll showed, before reports from the American Petroleum Institute industry group on Tuesday and the U.S. Energy Information Administration on Wednesday. 6 analysts polled estimated that the gasoline stockpiles fell by of 2.3 million barrels, down for a third