Global oil prices jumped higher Tuesday, lifting U.S. crude past $25 per barrel, after Saudi Arabia said it would deepen its production cuts next month in order to more quickly mop up a glut in world supply.
Saudi Arabia, the world's second-largest producer behind the United States, said it plans to trim another 1 million barrels per day from its June output total, taking the tally to a two-decade low of just under 7.5 million barrels per day.
The cuts followed a call last week between President Donald Trump and Saudi's King Salman during which the pair discussed U.S. military support for the Kingdom, as well as figures published Tuesday that showed state-owned Saudi Aramco posted a 25% decline in quarter profits.
"While supporting the re-balancing process, the market interpreted the (Saudi) move as a sign that demand, despite green shoots emerging across the world, still remains weak," said Saxo Bank's chief investment officer Steen Jakobsen. "Focus now turns to monthly oil market reports starting today with EIA, OPEC tomorrow and the IEA on Thursday."
Front-month WTI futures contracts, which expire on June 20, were last seen $1.63 higher from their Monday close in New York and changing hands at $25.77 per barrel.
Brent futures for July delivery, which benchmark around 60% of global crude purchases, were marked 86 cents higher at $30.48 per barrel.
The American Petroleum Institute will publish its private reading of domestic crude stocks later today, with analysts expecting a build of around 4.3 million barrels. The Energy Department will follow with official figures on Wednesday at 10:30 am Eastern time.
Last Friday, oil services group Baker Hughes said U.S. drillers pulled 206 rigs from operation in April, to the lowest levels in nearly four years, capping a one-month period during which some 35% of capacity has been taken offline amid signals of a cliff-edge decline in global demand.
Trump has been attempting to push oil prices higher for weeks after WTI crude slumped into negative territory last month as investors paid buyers for unwanted oil, rather than take delivery as mandated in future contracts, because of a lack of U.S. storage space.
"One week from today the June WTI futures will expire but with Genscape reporting a draw last week at Cushing, the storage and delivery hub for WTI crude oil futures, the risk of a disorderly expiry has almost been removed," Jakobsen added.