Oil prices have increased by 1% after OPEC+ group promised to meet commitments on output cuts.
Brent crude futures edged up $0.35, or 0.8%, to $41.86 a barrel, while US West Texas Intermediate (WTI) crude futures rose $0.38, or 1%, to $touch 39.22 per barrel, Reuters reported.
Both benchmarks rose around 2% on the earlier trading day. They are now heading towards weekly gains of 8%.
Both Iraq and Kazakhstan have announced their plans for oil production cuts to compensate for overproduction in May. This commitment also contributed to the rise in prices.
If the ‘laggard producers’ do make up for overproduction over the next three months, it will take extra barrels out of the market in an effective manner, even if OPEC+ does not extend its record 9.7 million bpd supply cuts beyond next month.
As agreed in April, the Organization of the Petroleum Exporting Countries (OPEC), including Russia and other producers, together known as OPEC+, have been curbing supply by approximately 9.7 million bpd since 1 May.
Earlier this month, the group also agreed to extend output cuts until the end of next month.
ANZ senior commodity strategist Daniel Hynes was quoted by the news agency as saying: “The supply cuts that they’ve (OPEC+) implemented and with other members like Iraq proposing to make up for the lack of adherence to the agreement in May and June does tighten up the market in the shorter term.
“But it’s not a strong signal of a wholesale shift in the medium term outlook in the market.”
Meanwhile, data released by industry group the Energy Information Administration (EIA) highlighted a rise in crude stocks by 1.2 million barrels to 539.3 million barrels last week.