Oil prices rise as faith in supply cuts grows

Oil prices rose on Tuesday, supported by growing confidence that producers are following through on commitments to cut supplies and as fuel demand picks up with coronavirus restrictions easing. Brent crude futures were up 45 cents, or 1.3%, at $35.98 a barrel by 1:09 p.m. EDT (1709 GMT). U.S. West Texas Intermediate (WTI) crude futures gained 89 cents, or 2.7%, to $34.14.

The Organization of the Petroleum Exporting Countries and other leading oil producers including Russia, a group known as OPEC+, agreed last month to cut their combined output by almost 10 million barrels per day in May-June to shore up prices and demand, which has been hit by the coronavirus pandemic. Russian Energy Minister Alexander Novak is due to meet oil major producers on Tuesday to discuss the possible extension of the current level of cuts beyond June, sources familiar with the plans told Reuters.

The RIA news agency said Russian oil production volumes were near the country’s target of 8.5 million bpd for May and June. On Monday, Russia’s energy ministry quoted Novak as saying that a rise in fuel demand should help to cut a global surplus of about 7 million to 12 million bpd by June or July. In an indication of lower supply in the future, data from energy services business Baker Hughes showed that the U.S. rig count hit a record low of 318 last week.

Oil prices rise as faith in supply cuts grows, Reuters, May 26