Oil prices have risen due to optimism that major producers will extend supply cuts beyond June and recovery from the Covid-19 outbreak will stimulate fuel demand.

Brent oil has increased to $40 per barrel for the first time since 6 March this year, Reuters reported.

Brent crude LCOc1 futures increased by 2% to $40.35 a barrel, while US West Texas Intermediate (WTI) crude CLc1 futures rose by 2.9% to  $38.18 per barrel.

Both benchmarks have seen gains in the recent weeks, supported by continued recovery in China and also easing of lockdown restrictions by other economies.

In April, OPEC+ Group agreed for a record output cuts of nearly 10Mbpd, starting from 1 May until the end of this month.

The group is now considering extending these output cuts into July or August, according to sources.

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Phillip Futures commodities senior manager Avtar Sandu was quoted by the news agency as saying: “Traders are expecting major crude producers to agree on an extension of their huge output cuts to shore up prices.”

According to a private survey, the services sector in China returned to growth for the first time since January this year.

Capital Economics said in a note: “As virus-related lockdown measures continue to be lifted, we expect that demand will gradually recover.”

Data from industry group the American Petroleum Institute (API) has highlighted a reduction in US crude inventories by 483,000 barrels in the week ending 29 May.

Investors are still awaiting the official government inventory data, which is due to be released later today.