Oil hits highest in 11 months after Saudi Arabia pledges to voluntarily cut production

TOKYO (Reuters) – Oil prices rose to their highest level since February 2020 on Wednesday after Saudi Arabia agreed to cut production more than expected in a meeting with allied producers, while figures for the industry showed that US crude inventories were down last week.

Brent rose nearly 1% to $ 54.09 a barrel, the highest since February 26, 2020. It was at $ 53.87 a barrel at 5:36 a.m. GMT after jumping 4.9% on Tuesday.

US West Texas Intermediate (WTI) futures reached $ 50.24 a barrel, also the highest since February 26, before slipping to $ 50. Tuesday’s contract closed up 4.6%.

Saudi Arabia, the world’s largest oil exporter, agreed on Tuesday to make voluntary additional cuts in oil production of 1 million barrels per day (b / d) in February and March, after a meeting with the United Nations. oil-exporting countries (OPEC) and other major producers that form the OPEC + group.

The cuts agreed to by Saudi Arabia were included in a deal to persuade other producers in the OPEC + group to keep production stable.

As coronavirus infections spread rapidly in many parts of the world, producers are trying to support prices as demand is hit by the implementation of new lockdowns.

“Despite this bullish supply deal, we believe Saudi Arabia’s move likely reflects signs of weakening demand with the return of lockdowns,” Goldman Sachs said in a note, although the bank of investment maintained its year-end 2021 forecast for Brent of $ 65 per barrel.

Iran’s seizure on Monday of a South Korean oil tanker in the Gulf, an OPEC member, also continued to support prices. Tehran has denied taking the ship and its crew hostage after seizing the tanker while pushing for Seoul to release $ 7 billion in funds frozen under US sanctions.

Meanwhile, US crude oil inventories fell 1.7 million barrels in the week of Jan. 1 to 491.3 million barrels, according to data from the American Petroleum Institute industry group on Tuesday night.