Oil prices rose on Tuesday, as OPEC’s de facto leader Saudi Arabia appeared to deepen the group’s supply cuts aimed at tightening markets, although gains were capped by the ongoing surge in U.S. supply and worries over the global economy, ONA reports citing Reuters.
U.S. West Texas Intermediate (WTI) crude oil futures CLc1 were at $57.08 per barrel at 0746 GMT, up 29 cents, or 0.5 percent, from their last settlement.
Brent crude futures LCOc1 were at $66.82 per barrel, up 24 cents, or 0.4 percent.
Bank of America Merrill Lynch said despite economic headwinds “we still see Brent prices averaging $70 per barrel this year and expect WTI to lag, averaging $59 per barrel in 2019.”
Oil prices have been receiving broad support this year from supply cuts by the Organization of the Petroleum Exporting Countries (OPEC) and non-affiliated allies like Russia aimed at tightening markets.
Saudi Arabia plans to cut its crude oil exports in April to below 7 million barrels per day (bpd), while keeping its output “well below” 10 million bpd, a Saudi official said on Monday. That compares to production of around 10.14 million bpd in February.
“Owing to the ... headline yesterday that Saudis have pledged deeper-than-agreed production cuts for April ... is the reason we saw a rally,” said Matt Stanley, a broker at Starfuels in Dubai.
Traders also pointed to the political and economic crisis in OPEC-member Venezuela as a driver for oil prices.
Venezuela’s opposition-run congress on Monday declared a “state of alarm” over a five-day power blackout that has crippled the country’s oil exports and left millions of citizens scrambling to find food and water.