Oil prices rise after Saudi Arabia pledge to deepen production cuts in June; Brent crude up 1.3%

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

Reuters May 12, 2020 15:58:00 IST
Oil prices rise after Saudi Arabia pledge to deepen production cuts in June; Brent crude up 1.3%

London: 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 38 cents, or 1.3 percent, to $30.01 at 0830 GMT, while US West Texas Intermediate (WTI) crude futures were up 70 cents, or 2.9 percent, at $24.84.

Saudi Arabia said on Monday it would cut output by a further 1 million barrels per day (bpd) in June, slashing total production to 7.5 million bpd, or down nearly 40 percent from April.

Oil prices rise after Saudi Arabia pledge to deepen production cuts in June Brent crude up 13

Representative image. Reuters

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+.

But both benchmark crudes still fell on Monday, despite those announcements, amid fears output cuts are still 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.

“The market is obviously far from certain that the additional cuts announced yesterday will be able to drive the oil price materially higher. But, today, the conclusion is that yes, the additional cuts are naturally positive on the margin,” said Bjarne Schieldrop, chief commodities analyst with SEB Bank.

Kazakhstan has ordered producers in large and mid-sized oil fields to cut output by about 22 percent in May to June, in line with the OPEC+ deal.

Output cuts, along with the easing of lockdowns in some countries that has helped lift fuel demand, are expected to ease pressure on crude storage capacity. But renewed coronavirus outbreaks in China and South Korea have revived concerns.

Data showing China’s April factory prices fell at the sharpest rate in four years added to investor jitters, revealing weak industrial demand.

“On the demand side there’s probably a view that the worst may be behind us, in terms of the peak damage point. If we do see a second wave, that would hurt demand and hurt pricing,” Commonwealth Bank’s Vivek Dhar said.

Inventory data this week will be key to extending any oil price rally.

US crude inventories likely rose by about 4.3 million barrels in the week to 8 May, a preliminary Reuters poll showed, before reports from the American Petroleum Institute industry group on Tuesday and the US Energy Information Administration on Wednesday.

Updated Date:

Find latest and upcoming tech gadgets online on Tech2 Gadgets. Get technology news, gadgets reviews & ratings. Popular gadgets including laptop, tablet and mobile specifications, features, prices, comparison.

also read

Tokyo Olympics 2020: US Open paves way for Games to be held safely, says wheelchair champion Shingo Kunieda
Sports

Tokyo Olympics 2020: US Open paves way for Games to be held safely, says wheelchair champion Shingo Kunieda

Shingo Kunieda, 24-time Grand Slam singles champion, widely considered the best player wheelchair tennis has seen, said the US Open's ability to stave off the virus was a hopeful sign for next year's postponed Games.

French Open 2020 organisers hoping for 5,000 fans in stands daily even as coronavirus concerns grow
Sports

French Open 2020 organisers hoping for 5,000 fans in stands daily even as coronavirus concerns grow

French Health Minister Olivier Veran said on Wednesday that a new limit of 1,000 people will be imposed at big events in big cities like Paris amid growing coronavirus concerns.

Italian Open 2020 semi-finals and finals to have up to 1,000 spectators in attendance
Sports

Italian Open 2020 semi-finals and finals to have up to 1,000 spectators in attendance

The Italian Open tournament, which features nine-time champion Rafael Nadal and top-ranked Novak Djokovic, has so far been played without fans because of the coronavirus pandemic.