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Oil Prices Rise On Supply Cut Hopes

Oil prices rose on Tuesday amid renewed hopes that producers will stick to commitments to cut crude supply.

Optimism about the easing of coronavirus lockdowns around the world also helped fuel hopes for demand recovery.

Benchmark Brent crude rallied 1.5 percent to $36.06 a barrel, after having risen 1.1 percent in thin holiday trade on Monday.

U.S. West Texas Intermediate (WTI) crude futures were up 2.4 percent at $34.05 a barrel. There was no WTI settlement the previous day due to the U.S. Memorial Day holiday.

Russian energy minister Alexander Novak estimates that the current global crude surplus has fallen to 7mn-12mn b/d and that the global oil market will return to balance in June-July.

Supply has already dropped by 14 million to 15 million barrels per day (bpd) owing to a coordinated production cut by the Opec+ alliance and output declines in other countries, according to Novak.

Moscow estimates the current global surplus at between 7 million and 12 million barrels per day (bpd).

After agreeing in April to cut output by nearly 10 million bpd for May and June, OPEC+ countries are set to meet again in early June to discuss maintaining their supply cuts.

Meanwhile, data from energy services firm Baker Hughes showed the United States’ rig count hitting a record low of 318 in the week to May 22.

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