Extending gains for a fourth straight session, oil prices climbed on Tuesday. After touching the highest level since April 9, Brent crude climbed $0.85 (2.4 percent) to $35.66 a barrel. After hitting the highest level since March 16, US West Texas Intermediate crude was at $33.12 a barrel, up $1.30 (4.1 percent).
Signs that output cuts agreed by the OPEC+ being implemented on the ground also boosted the oil market. In the first half of May, oil exports have been cut sharply by OPEC+. This implies a strong start done by OPEC+ in complying with a new output cut agreement.
OPEC+ members are apparently slashing output as they promised for this month, triggering investors’ sentiment to improve. More voluntary cuts expected for next month. At the same time, there is growing optimism that economic activity and fuel demand will be boosted by the easing of global lockdowns. An increase to $35 a barrel expected from the US crude benchmark.
US production is also falling in further support for prices. The crude output from seven major shale formations expected to reach 7.822 million bpd in June, down by a record 197,000 bpd. According to the US Energy Information Administration, that would be the lowest since August 2018.
