Oil price rises as market is buoyed by supply cuts

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Increase in fuel demand is expected to help cut the current global surplus

A worker checks the valve of an oil pipe at the Lukoil company owned Imilorskoye oil field outside the Siberian city of Kogalym, Russia. File photo: REUTERS/SERGEI KARPUKHIN

US West Texas Intermediate crude futures gained 3.2%, or $1.06, to $34.31 a barrel up to 4.29am GMT, just off an intraday high of $34.33. There was no WTI settlement on Monday because of the US Memorial Day holiday. The market was buoyed by comments from Russia reporting its oil output had nearly dropped to its target of 8.5-million barrels a day for May and June under its supply cut deal with the Organisation of the Petroleum Exporting Countries and other leading producers, a grouping known as Opec+.

Opec+ countries are due to meet again in early June to discuss maintaining their supply cuts to shore up prices, which are still down 45% since the start of the year. The big producers agreed in April to cut output by nearly 10-million barrels a day for May and June.

 

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