Oil prices climbed about $1 a barrel on Tuesday on hopes that major crude producers will agree to extend output cuts during a video conference likely to be held this week and as countries and U.S. states begin to reopen after coronavirus lockdowns.
Brent crude rose 3.1%, or $1.00, to $39.32 a barrel by 1:32 p.m. EDT (1732 GMT). U.S. West Texas Intermediate crude (WTI) climbed 3.1%, or $1.09, to $36.53 a barrel.
Both benchmarks were at near three-week highs.
The Organization of the Petroleum Exporting Countries and others including Russia, a grouping known as OPEC+, are considering extending their production cuts of 9.7 million barrels per day (bpd), or about 10% of global production, into July or August, at a meeting expected to be held on Thursday.
“This week’s focus is seeing a shift toward a combined Saudi-Russia effort to extend current substantial production cuts across the summer period in further reducing a substantial supply glut,” said Jim Ritterbusch of Ritterbusch Oil Associates.
Under the original OPEC+ plan, the cuts were due to run through May and June, scaling back to a reduction of 7.7 million bpd from July to December.
Saudi Arabia has been pushing to keep the deeper cuts in place for longer, sources said.
The gradual reopening of businesses in a growing number of U.S. states and countries around the world after shelter-in-place mandates caused by the coronavirus pandemic also boosted oil prices.
“As the economy opens up, there’s more and more people on the road. That’s going to be good, obviously, for crude oil,” said Bob Yawger, director of energy futures at Mizuho in New York.
Steadily increasing U.S. gasoline demand falling crude inventories at the nation’s oil storage hub in Cushing, Oklahoma, has also supported prices, Yawger said.
Industry group American Petroleum Institute will release its weekly oil inventory report later in the day, with official data following on Wednesday.