Oil prices pushed closer to the $30 a barrel level in Thursday’s trading as they were up 9% with West Texas Intermediate crude for June delivery rising $2.27 to settle at $27.56 a barrel on the New York Mercantile Exchange.
It was the highest level in nearly six weeks of trading according to Dow Jones Market Data.
July Brent crude, the international benchmark rose 6.7%, adding $1.94 to settle at $31.13 a barrel on the ICE Futures Europe.
The increase in U.S. prices came on the back of recent pledges by major oil producers to cut output as the International Energy Agency pointed to a tightening of the supply picture later in the year according to Market Watch.
The move for prices comes a day after U.S. government data showed a surprise weekly fall in domestic crude supplies, the first in 16 weeks, as well as declines in total crude production.
Global oil prices have been buoyed in recent days by Saudi Arabia’s pledge to cut its oil production by an additional one million barrels per day, starting in June, on top of cuts outlined in the deal between Organization of the Petroleum Exporting Countries and its allies that kicked in on May 1, said Cailin Birch, global economist at The Economist Intelligence Unit.
The “unprecedented pledges” by Saudi Arabia and its OPEC+ partners should “help to shore up investor optimism for a slight improvement in the market balance in June and July,” she said in emailed commentary.
“However, serious downside risks remain. Economies around the world are beginning to gradually lift the Covid-19 restrictions in May, and it remains unclear what the outcome of this will be,” Birch said. “If this opening turns out to be premature, and a second wave of coronavirus cases emerge, we would expect lockdown measures to return and oil prices to sink again.”
In a monthly report, the IEA on Thursday said the COVID-19 lockdowns will continue to sharply curtail crude demand in May, while producers implement the largest monthly production cut on record.
Natural gas prices on the NYMEX fell a penny and finished the day at $1.67 per MMBtu.
Source: Market Watch