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Oil prices have increased by around 1% on the back of weakening dollar and decision announced by Saudi Arabia to cut output and strengthen its commitment to the OPEC’s market stabilisation plan.

Brent crude futures climbed 63 cents, or 1%, to reach $64.99 a barrel, while US West Texas Intermediate (WTI) crude futures soared 83 cents, or 1.4%, to trade at $61.43, according to Reuters.

The prices of Brent and WTI futures scaled up 2.6% and 2.4% respectively on Wednesday after they began to buck the trend of declining prices earlier this week.

US dollar was in greater demand last week, yet has more recently recorded a 15-month low against Japanese yen.

Traders are speculating an increase in oil consumption as the weakening US dollar could lead to cheaper import costs for countries that use other currencies domestically.

Futures brokerage AxiTrader chief market strategist Greg McKenna was quoted by the news agency as saying: “On commodity markets, everyone loves a lower US dollar.”

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By GlobalData
“I think we are going to be sticking with our policy to withhold production throughout 2018.”

On the supply front, Saudi Arabia has reinforced its support for output cuts enforced by the OPEC and other producers, including Russia since January last year to arrest supply glut.

Saudi Energy Minister Khalid al-Falih was quoted by the news agency as saying: “If we have to err on over-balancing the market a little bit, so be it.

“I think we are going to be sticking with our policy (to withhold production) throughout 2018.”

According to the news agency, the production cuts backed by the OPEC have kept supplies in the Asian markets restricted, with a significant reduction of storage tanks around Singapore’s trading hub over the past six months.

However, rising US production is a cause of concern for the OPEC-led group.

US bettered Saudi Arabia in terms of crude oil production, registering more than ten million barrels per day (bpd).