Oil prices ticked up on Tuesday supported by Saudi Arabia’s pledged production output cut, which came into force as of Feb. 1, soothing investor fears of a supply glut.
International benchmark Brent crude was trading at $56.92 per barrel at 0703 GMT for a 1.05% rise after closing Tuesday at $56.33 a barrel.
American benchmark West Texas Intermediate (WTI) traded at $54.15 per barrel at the same time for a 1.12% increase after it ended the previous session at $53.55 a barrel.
The oil price increase was spurred over the easing of supply glut fears at the same time when global oil demand is still coming under pressure from the coronavirus pandemic.
In line with the OPEC+ decision in December, Saudi Arabia's voluntary output reduction began on Feb. 1 to bring the production cut rate to 8.125 million barrels per day (bpd) for February and 8.05 million bpd for March. This decision means that OPEC+ will reduce its output in February by 925,000 bpd and 850,000 bpd in March relative to output rates in January.
Russia and Kazakhstan will collectively increase their output by 75,000 bpd while the rest of the OPEC+ group will hold their production steady.
Optimism over the US economic stimulus package also supported the uptick in prices ahead of the meeting with US President Joe Biden and Republican senators on Tuesday to discuss the new COVID-19 support bill.
By Sibel Morrow