LONDON: Oil prices rose today, supported by growing confidence that producers are following through on commitments to cut supplies and as fuel demand picks up as coronavirus lockdowns ease.
Brent crude futures were up 1.4%, or 48 cents, at US$36.01 (RM157.18) a barrel by 1210 GMT. US West Texas Intermediate (WTI) crude futures gained 2.3%, or 75 cents, to US$34 (RM148.41). There was no WTI settlement on Monday because of the US Memorial Day holiday.
"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 barrels per day (bpd), or perhaps even bigger, self-imposed and co-ordinated output restraint," said oil broker PVM's Tamas Varga.
"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 ministry on Monday quoted minister Alexander Novak as saying that a rise in fuel demand should help to cut a global surplus of about 7 million to 12 million bpd 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% since the start of the year.
The world's major producers, including Saudi Arabia and Russia, agreed in April to cut their collective output by nearly 10 million bpd for May and June.
Data from energy services business Baker Hughes, meanwhile, showed that the US rig count hit a record low of 318 in the week to May 22, also indicating lower future output.
Meanwhile, Novak is due meet oil majors to discuss the implementation of global oil production curbs and the possible extension of the current level of cuts beyond June, sources familiar with the plans told Reuters.
The meeting today is a further sign that Moscow is committed to supporting any future joint steps to stabilise oil markets for as long as may be required, after slashing its production to close to its quota under the global deal.
The Kremlin said today that the Opec+ deal participants will look at how the situation on global oil markets develops before taking any policy decisions if additional efforts were needed to support the energy market and address overproduction.
Kremlin spokesman Dmitry Peskov also said the deal on global oil production cuts agreed last month had definitely proved effective and helped ward off negative scenarios on oil markets.
Sources said earlier this month that Opec+ wanted to maintain existing oil cuts beyond June, when the group is next due to meet and after which the output reductions are currently set to be eased to 8 million bpd until December.
Novak was expected to chair an online meeting at noon, one of the sources said. The Energy Ministry did not immediately respond to a request for comment.
"A possibility of the extension of the existing quotas after June is expected to be debated. The period of the extension will be discussed as well," another source, familiar with the meeting details, said. – Reuters