Oil prices up after Saudi pledge on cuts eases some glut fears

Western Canadian canola fields surrounding an oil pump jack are seen in full bloom before they will be harvested later this summer in rural Alberta, Canada - Reuters

London (Reuters): 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 78 cents, or 2.6%, to $30.41 at 1216 GMT, while US West Texas Intermediate (WTI) crude was up $1.22, or 5%, at $ 25.36.

Saudi Arabia said on Monday it would adding to existing cuts by reducing output by a further one million barrels per day (bpd) in June, slashing total production to 7.5 million bpd, or down nearly 40% from April.

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+.

Both benchmark crudes had still fallen on Monday despite those announcements, amid fears output cuts were 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.