NEW YORK: Oil prices rose Tuesday after US President Donald Trump said producers are considering cutting 20 million barrels per day — more than double the figure publicly announced — to help the virus-hit sector.
US benchmark West Texas Intermediate rose nearly 2% to trade at $22.85, while international benchmark Brent crude climbed 1.5% to trade at $32.26.
OPEC producers dominated by Saudi Arabia and allies led by Russia thrashed out a compromise deal on Sunday to cut production by nearly 10 million barrels per day from May.
The agreement was aimed at boosting prices after months of heavy falls, with the COVID-19 outbreak sapping demand as countries around the world have put their populations under lockdown.
A Saudi-Russian price war compounded the crisis, with both countries ramping up production as they bid to hold on to market share and undercut US shale producers.
Prices fluctuated after the output cut was announced, however, with traders still nervous about a supply glut amid estimates that demand has plunged 25 million barrels per day.
Trump said Monday that the cuts may be deeper than the headline figure — with top producers considering slashing output by 20 million barrels a day under the deal.
“People are saying 10 million but we think the number they will actually hit is going to be closer to 20 million barrels a day,” Trump said at a press briefing about the coronavirus, referring to how much oil production would be cut.
“This historic action will help nearly 11 million American workers who are supported by the US oil and gas industry.”
Trump had already tweeted about the deal earlier in the day.
“Thank you to all of those who worked with me on getting this very big business back on track, in particular Russia and Saudi Arabia,” he wrote.
The agreement between the Vienna-based Organisation of the Petroleum Exporting Countries and non-OPEC producers foresees deep output cuts in May and June followed by a gradual rise in production until April 2022.
But with demand down by about 25 million barrels per day and North American producers shutting down their rigs because they don’t have space to store their crude, Dan Pickering, chief investment officer at Pickering Energy Partners, told AFP the deal’s benefits are likely to be seen only later in the year. “The reality is things are bad. They are going to stay bad for a couple of months,” he said.
