Oil futures jumped Tuesday, boosted by an unexpected commitment from Saudi Arabia to deepen output reductions in June in an attempt to help drain the excess in the international market that has built up as the coronavirus pandemic crushed fuel demand.
Brent crude futures grew 0.5% (15 cents) to $29.78, after hitting an intraday high of $30.11/barrel.
U.S. West Texas Intermediate (WTI) crude futures have been up 1% (26 cents) at $24.40 after touching an intraday high of $24.77.
Saudi Arabia stated overnight; it could reduce production by a further 1 million barrels per day (BPD) in June, cutting its total production to 7.5 million BPD, down almost 40% from April.
The United Arab Emirates and Kuwait dedicated to cut output by another 180,000 BPD in total.
Kazakhstan has ordered producers in large and mid-sized oil fields along with Tengiz and Kashagan to reduce oil production by around 22% in the May to June interval.
Nonetheless, the moves to deepen cuts raised questions for some about why the further cuts had been needed.
The cuts, combined with the world’s largest economies relaxing coronavirus bans and stoking a slow recovery in fuel demand, are expected to relax the stress on crude storage capacity.
Nonetheless, within the wake of latest outbreaks of the coronavirus, along with China and South Korea, the market is wary of the second wave of COVID-19 instances spurring renewed lockdowns.
Data showing China’s April factory prices dropped at the sharpest rate in four years also added to investor jitters as it uncovered weak industrial demand.