Oil Prices Rise Supported by Producers’ Commitment to Cut Supplies

Declining Oil Prices Put Pressure On Contracting Market

Oil prices rose on Tuesday, supported by signs that producers are following through on commitments to cut supplies. Also, as fuel demand picks up with coronavirus restrictions easing.

Brent crude futures gained 30 cents, to settle at USD35.83 a barrel. US West Texas Intermediate (WTI) crude futures rose 73 cents to settle at USD33.98 a barrel.

“The current recovery in oil prices has primarily been driven by supply considerations. The world’s swing producers; the OPEC+ group, is more than living up to expectations to adhere to the 9.7 million bpd. Or perhaps even bigger, self-imposed and coordinated output restraint,” Reuters quoted oil broker PVM’s Tamas Varga as saying.

“As lockdown restrictions are being eased, the demand side of the equation also provides support.”

The market was buoyed by Russia saying that its oil output had dropped close to its target of 8.5 million bpd for May and June under the supply deal agreed by major producers (OPEC+).

Russia’s Energy Minister Alexander Novak said on Monday that a rise in fuel demand should help to cut a global surplus by June or July.

OPEC+ countries are due to meet again in early June to discuss maintaining their supply cuts to shore up prices; which are still down about 45 percent since the start of the year.

Data from energy services business Baker Hughes (BKR.N); meanwhile, showed that the US rig count hit a record low of 318 in the week to May 22, also indicating lower future output.