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Oil futures erased early losses to trade higher Monday, finding support after news reports said Saudi Arabia moved to further cut production in June.
The Saudi government directed Saudi Aramco to further cut June production by 1 million barrels a day to encourage other members of the Organization of the Petroleum Exporting Countries, and their allies, to comply with an agreement on output cuts, according to reports.
West Texas Intermediate crude for June delivery CL.1, +0.24% CLM20, +0.24% on the New York Mercantile Exchange was up 33 cents, or 1.3%, to $25.07 a barrel after dropping nearly 3% in earlier action. The front-month contract rose 25.1% last week, according to Dow Jones Market Data.
Global benchmark July Brent crude BRNN20, -0.29% was up 11 cents, or 0.4%, at $31.08 a barrel on ICE Europe. Brent last week logged a 17.1% weekly climb.
“Investors will be hoping the U.S. continues it’s swift production shutdown to support prices, while concerns over a spike in infections will also weigh heavily on their decision making,” said Mihir Kapadia, chief executive of Sun Global Investments, in a note.
Germany, which loosened restrictions after pushing the number of new daily infections below 1,000, saw regional increases in cases linked to slaughterhouses and nursing homes. China saw 14 new cases Sunday, the first double-digit rise in 10 days, while South Korea saw a rise in cases linked to night clubs.
Read:Scientists expect an acceleration of coronavirus cases as states reopen
See:COVID-19 case tally: 4.1 million cases, 282,947 deaths
Oil’s recent bounce has been fueled by optimism over prospects for reopening the U.S. and global economy alongside a sharp drop in production. Crude prices have been slammed this year as the pandemic crushed demand, contributing to a global glut of crude that was exacerbated by a month-long price war between Saudi Arabia and Russia that added to the tide of unneeded crude.
