Oil markets rose on Tuesday, supported by voluntary production cuts from the world’s 4 largest exporters, and that would wipe out the giant supply surplus that caused the price crash .
Traded futures contracts for US crude oil on the rise 6.01% to levels of 25.59 dollars a barrel, while Brent Akkub rose to 30.07 dollars a barrel .
The Kingdom of Saudi Arabia decided on Monday to voluntarily reduce oil production by an additional one million barrels during the month of June, to decrease production to 7.5 million barrels per day, a decrease of about 40% from production levels in April . This stimulated market confidence in the possibility of a supply glut .
Oil prices fell Brent by 65% during the first quarter, before OPEC ‘s approval and allies to reduce production, by 9.7 million barrels per day .
“The production cuts give encouragement to the commitment of the rest of the members to deeper production cuts, which quickly rebalance the global oil market, ” says Stephen Ebens, head of global market strategy at Axi Corp.
The UAE and Kuwait followed the steps of Saudi Arabia, while Kazakhstan requested a 22% reduction in production between May and June .
The collapse in oil prices caused a loss of 25% of Saudi Aramco’s net profit .SE: 2222 ) during the first quarter .
But does this open the door for more gains?
There is only one negative factor in the market right now : US drilling companies are back to opening wells recently as price rises, according to energy giant pipeline company Energy Transfer .
The company lost 8% of the volume of oil fed to its pipelines at the closure of the wells at the beginning of this month in the Berman Basin area, according to the company’s commercial director, and what he said in a press conference today .
” We witnessed a 25% return today, ” said Macria .
Another threat remains : the Corona virus changes the nature of oil demand, that is, demand reaches its peak ( meaning that it cannot rise any longer ) , according to BP CEO, Bernard Looney, for the Financial Times .
Later in the day, we await the American Petroleum Institute’s release of the weekly inventory report, and the Seaful Stock of Oil volume in Cushing, Oklahoma, which fell by 2.17 million barrels last week, which reduced a new negative price risk, when it comes to the June contracts for WTI .