Oil prices climb after Saudi Arabia pledges further output cuts

Last updated: May 13, 2020 12:17 am

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MCKITTRICK, CA - MARCH 23: Pump jacks and wells are seen in an oil field on the Monterey Shale formation where gas and oil extraction using hydraulic fracturing, or fracking, is on the verge of a boom on March 23, 2014 near McKittrick, California. Critics of fracking in California cite concerns over water usage and possible chemical pollution of ground water sources as California farmers are forced to leave unprecedented expanses of fields fallow in one of the worst droughts in California history. Concerns also include the possibility of earthquakes triggered by the fracking process which injects water, sand and various chemicals under high pressure into the ground to break the rock to release oil and gas for extraction though a well. The 800-mile-long San Andreas Fault runs north and south on the western side of the Monterey Formation in the Central Valley and is thought to be the most dangerous fault in the nation. Proponents of the fracking boom saying that the expansion of petroleum extraction is good for the economy and security by developing more domestic energy sources and increasing gas and oil exports. (Photo by David McNew/Getty Images)

Oil prices gained on Tuesday after Saudi Arabia announced plans to further lower its production.
The West Texas Intermediate for June delivery rose 1.64 U.S. dollars to settle at 25.78 dollars a barrel on the New York Mercantile Exchange, while Brent crude for July delivery was up 0.38 dollar to close at 29.98 dollars a barrel on the London ICE Futures Exchange.
“Prices have recently been boosted not only by hopes that demand will soon return, but also by massive voluntary and involuntary production cuts,” Eugen Weinberg, energy analyst at Commerzbank Research, said in a note on Tuesday.
Saudi Arabia said on Monday that it plans to slash its oil production in June by an additional 1 million barrels per day, in addition to the reduction committed by the kingdom in the output-cut agreement reached by the OPEC+ last month.
The United Arab Emirates and Kuwait also intended to reduce output by more than required under the OPEC+ deal.
The Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, agreed to cut output by 9.7 million barrels per day for May and June, aiming to tackle a global supply glut on the back of the COVID-19 crisis.