Oil prices have increased by over $1 per barrel to highest level in more than a month due to support from ongoing output cuts by OPEC producers to stabilise oil prices.

Brent crude LCOc1 rose $1.19 at $33.69 a barrel, while US West Texas Intermediate (WTI) crude CLc1 increased $1.26 at $30.69 a barrel, reported Reuters.

Signs of fuel demand recovery also contributed to prices as more countries began partial easing of lockdown measures that have been imposed to contain the spread of coronavirus outbreak.

AxiCorp chief global market strategist Stephen Innes was quoted by the news agency as saying: “Oil prices may show further upside momentum as the easing in mobility restrictions grows.”

The June WTI contract is set to expire on 19 May, but there was slight sign of WTI repeating the historic crash below zero seen last month as prices gain on signs of recovery in fuel demand.

Meanwhile, US energy firms have reduced the number of oil and natural gas operating rigs to their lowest for a second consecutive week.

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By GlobalData

This move has partially contributed to easing concerns about the WTI contract’s delivery point in Cushing, Oklahoma which is running out of storage space.

CMC Markets Sydney chief market strategist Michael McCarthy said: “Given particularly that surprise draw that we saw on inventories last week in the US, it seems unlikely that those concerns about storage facilities will reassert themselves.”

The Chicago Mercantile Exchange that hosts trading in WTI futures, brokerages and the United States Oil Fund (USO) has taken necessary steps that reduce open positions prior to the expiry of the June WTI contract.

The OPEC+ Group has officially started record output cuts of approximately ten million bpd from 1 May.

Furthermore, Saudi Arabia said earlier this week that it plans to cut production by a further one million barrels per day (bpd) next month.