Oil prices rose overnight, as optimism about recent commitments from major oil producers to curb production offset concerns that a resurgence in coronavirus cases could hurt fuel demand.
Brent crude rose 38 US cents, or 0.9 per cent, to settle at $US41.18 a barrel. West Texas Intermediate crude (WTI) rose 75 US cents, or 2 per cent, to end at $US38.94 a barrel.
The Organisation of the Petroleum Exporting Countries, Russia and other producers, a group known as OPEC+, on Saturday agreed to extend record cuts of 9.7 million barrels per day (bpd) until the end of July.
However, Saudi Arabia, Kuwait and the United Arab Emirates said they would not maintain supplemental reductions that amount to more than a million barrels of daily supply.
Supportive for the market, Libya said it declared force majeure on some exports from its Sharara oilfield on Tuesday, after production was briefly halted by an armed group just days after output had resumed following a blockade that had lasted months.
“That has helped to mitigate any further falls. They were in the process of restarting, which of course would have added to the oversupply situation,” said Andrew Lipow, president of Lipow Oil Associates in Houston.
Fuel demand has recovered from April’s collapse brought on by lockdowns to control the pandemic. Analysts have said, however, that the oil market’s rapid surge to more than $US40 a barrel may be banking an overly optimistic view of consumption.
The coronavirus has killed more than 400,000 people worldwide, and the number of new daily cases hit a record on Sunday as the pandemic has yet to peak in central America, the World Health Organisation (WHO) said on Monday.
Goldman Sachs raised its 2020 forecast for Brent to $US40.40 a barrel and WTI to $US36 but warned that prices are likely to pull back in the coming weeks because of demand uncertainty and inventory overhang.
US crude inventories have been growing as the pandemic curbs demand. Crude inventories rose by 8.4 million barrels in the week to June 5 to 539.4 million barrels, data from industry group the American Petroleum Institute showed on Tuesday. Analysts had expected a draw of 1.7 million barrels.
Official US government data is due on Wednesday.