Crude oil prices rose more than 1% Tuesday on steep Opec production cuts and Saudi Arabia’s plan to drop March crude output by more than 500,000 barrels per day below its pledged reduction.
Rising investor optimism for a breakthrough in the latest round of U.S.-China trade discussions also boosted futures.
International benchmark Brent crude futures were up 81 cents, or 1.3%, at $62.32 a barrel at roughly 2:30 p.m. ET.
U.S. West Texas Intermediate crude oil futures ended Tuesday’s trading session up 69 cents, or 1.3%, at $53.10/Bbl, Kallanish Energy reports.
Production cuts implemented Jan. 1 by Opec and allies led by Russia, collectively known as Opec+, have tightened markets despite rising output in non-Opec+ countries, especially the U.S.
Opec announced Tuesday it had lowered crude oil production almost 800,000 Bpd in January, to 30.81 million Bpd (Mmbpd) under its voluntary global supply cut pact.
Saudi energy minister Khalid al-Falih told the Financial Times newspaper the kingdom would reduce production to about 9.8 million bpd in March to bolster oil prices.
Investors were also hopeful a new round of talks between U.S. and Chinese officials would bring the two sides close to resolving their ongoing trade war ahead of a March 1 deadline.
U.S. Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer arrived in Beijing Tuesday before high-level talks set for later in the week.
If the two sides do not come to an agreement by the deadline, U.S. tariffs on $200 billion worth of Chinese imports are scheduled to increase to 25% from 10%.
Rising U.S. oil production, fighting near Libya’s main oilfield, sanctions on Venezuela and suspense over whether Washington will grant more waivers to import Iranian oil have left markets unsure about broader supply.
This post appeared first on Kallanish Energy News.