Saudi Arabia’s pledge to reduce output has kept oil prices hovering near 11-month highs and continued to sustain the market mood.

Brent crude edged up $0.02 to $54.40 a barrel and reached $54.90 while US West Texas Intermediate (WTI) also gained $0.02 to $50.85 a barrel, Reuters reported.

The world’s biggest oil exporter Saudi Arabia said earlier this week that it would make voluntary cuts to its production by another one million barrels per day (Mbpd) in February and March.

The move is aimed at increasing oil prices.

Commodities broker Fujitomi chief analyst Kazuhiko Saito was quoted by the news agency as saying: “Oil markets are expected to stay in a bullish tone toward February on the back of Saudi’s surprise promise to cut production.

“But concerns over slower demand in gasoline and other fuels in the US and other parts of the world due to wider restrictions to contain spreading Covid-19 pandemic may limit gains.”

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By GlobalData

In the US, the Covid-19 pandemic has claimed the lives of more than 4,000 people in a single day. In more than five months, China reported the biggest increase in cases on a daily basis.

Data released by the Energy Information Administration highlighted an increase in fuel inventories in the US last week and gasoline stocks also rose by 4.5 million barrels, the biggest rise since last April.

Oil prices also received some support as the broadly upbeat mood in global equities, led by Wall Street, hit record highs on 7 January.