Oil futures rose on Tuesday, boosted by an unexpected commitment from Saudi Arabia to deepen production cuts in June to help drain the glut in the global market that has grown as the coronavirus pandemic crushed fuel demand.
Brent crude futures climbed to a high of $30.11 a barrel and were up 0.8%, or 24 cents, at $29.87, reversing some of the previous session’s losses. The benchmark fell $1.34 on Monday, CNBC reported.
US West Texas Intermediate crude futures were up 1.6%, or 38 cents, at $24.52 after touching a high of $24.77.
Saudi Arabia said 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.
The United Arab Emirates and Kuwait committed to cut production by another 180,000 bpd in total.
Still, the moves to deepen cuts raised questions for some about why the further cuts were needed.
The cuts, combined with the world’s biggest economies relaxing coronavirus restrictions and stoking a gradual recovery in fuel demand, are expected to ease pressure on crude storage capacity.
However, in the wake of new outbreaks of the coronavirus, including in China and South Korea, the market is wary of a second wave of Covid-19 cases spurring renewed lockdowns. US crude inventories likely rose by about 4.3 million barrels in the week to May 8.
