Brent oil rises to highest since February after Saudi Arabia output cut

Brent oil prices rose on Wednesday to the highest since February after Saudi Arabia agreed to make bigger cuts in output than expected during a meeting with allied producers, while industry data showed US crude stockpiles fell last week.

Brent crude rose as much as 0.6per cent to $53.94 a barrel, the highest since Feb. 26, 2020. It was at $53.79 a barrel at 0147 GMT and gained 4.9per cent on Tuesday.

US West Texas Intermediate (WTI) futures gained 13 cents, or 0.26 per cent, to $50.06 a barrel. The contract on Tuesday closed up 4.6 per cent at $49.93, its highest since Feb. 24, 2020.

Saudi Arabia, the world’s biggest oil exporter, agreed on Tuesday to make additional, voluntary oil output cuts of 1 million barrels per day (bpd) in February and March, after a meeting with the Organization of the Petroleum Exporting Countries (Opec) and other major producers that form the group known as Opec+.

The reductions agreed by Saudi Arabia were included in a deal to persuade other producers in the Opec+ group to hold output steady.

With coronavirus infections spreading rapidly in many parts of the world producers are trying to support prices as demand takes a hit from new lockdowns being put in place.

“The decision came as a huge surprise as the organisation struggled yesterday to agree to a deal,” Capital Economics said in a note.

It “adds weight to our view that the oil market will be in a deficit ... which will help lift the price of Brent to $60 per barrel by end-year,” it said.

US crude oil inventories dropped by 1.7 million barrels in the week to Jan. 1 to 491.3 million barrels, data from industry group the American Petroleum Institute showed late on Tuesday.