Oil prices up after Saudi pledge on cuts eases some glut fears

Wednesday, 13 May 2020 00:00 - - {{hitsCtrl.values.hits}}

Western Canadian canola fields surrounding an oil pump jack are seen in full bloom before they will be harvested later this summer in rural Alberta, Canada - Reuters

London (Reuters): Oil prices rose on Tuesday, boosted by an unexpected commitment from Saudi Arabia to deepen production cuts in June to help drain a supply glut built up during the coronavirus crisis.

Brent crude advanced 78 cents, or 2.6%, to $30.41 at 1216 GMT, while US West Texas Intermediate (WTI) crude was up $1.22, or 5%, at $ 25.36.

Saudi Arabia said on Monday it would adding to existing cuts by reducing output by a further one million barrels per day (bpd) in June, slashing total production to 7.5 million bpd, or down nearly 40% from April.

The United Arab Emirates and Kuwait also committed to cut an extra 180,000 bpd in total, adding to reductions the producers agreed under a deal between OPEC, Russia and other nations, a group known as OPEC+.

Both benchmark crudes had still fallen on Monday despite those announcements, amid fears output cuts were not enough to balance a market where demand has been hammered by the coronavirus and where consumption could be hit again by a second wave of infections.