Oil prices rose overnight, supported by signs that producers are following through on commitments to cut supplies and as fuel demand picks up with coronavirus restrictions easing.
Brent crude futures gained 64 US cents, or 1.8 per cent, to settle at $US36.17 a barrel. US West Texas Intermediate (WTI) crude futures rose $US1.10, or 3.3 per cent, to settle at $US34.35 a barrel.
The Organisation of the Petroleum Exporting Countries and producers including Russia, a group known as OPEC+, agreed last month to cut their combined output by almost 10 million barrels per day in May-June to support prices at a time when coronavirus pandemic quarantines have slashed fuel demand.
Russian Energy Minister Alexander Novak was due to meet oil producers on Tuesday to discuss the possible extension of current cuts beyond June, sources familiar with the plans told Reuters. Some other nations including major Gulf producers Saudi Arabia, United Arab Emirates and Kuwait have already pledged to go beyond their commitments.
The RIA news agency said Russian oil production volumes were near the country’s target of 8.5 million bpd for May and June.
“All the talk about balance in a couple of months seems to be supportive,” said Phil Flynn, senior analyst at Price Futures Group.
On Monday, Russia’s energy ministry quoted Novak as saying that a rise in fuel demand should help cut a global surplus of about 7 million to 12 million bpd by June or July.
“Global crude supply in June will likely be down 12 million bpd from March levels,” said Bjornar Tonhaugen, Rystad Energy’s head of oil markets.
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 per cent since the start of the year.