Crude oil prices increased following commitments from major producers to cut crude output in response to weaker fuel demand following the surge in new Covid-19 cases globally.
Brent crude futures rose by $0.51, or 0.9%, to reach $56.86 a barrel while US crude increased by $0.53, or 1% to reach $54.08 a barrel, reported Reuters.
According to a Reuters survey, Organization of the Petroleum Exporting Countries (OPEC) crude production in January increased for the seventh month following a commitment by the group and its allies to further ease supply limits, although the growth was lower than expected.
In January, OPEC reported 25.75 million barrels per day (bpd) pumping, which is an increase of 160,000bpd from December 2020, as per the survey.
Two sources familiar with the data were quoted by Reuters as saying that Russia’s oil and gas condensate production output increased by 120,000bpd in January compared to 10.16 million bpd in December, following the deal on production restraint.
In addition to Russia, oil production volume in Kazakhstan reduced by 2% in January compared to the previous month. This was due to power cuts.
The two countries are members of the OPEC+ grouping, which intends to make production cuts to help support prices, the sources said.
Axi global markets strategist Stephen Innes said: “The critical take away from yesterday’s oil market recovery rally is that OPEC+ members seem to be taking their commitment to output cuts to the heart. Having OPEC+ singing from the same hymn page is music to every oil trader’s ears.”