Singapore: Oil prices rose on Tuesday after US President Donald Trump said that producers are considering cutting 20 million barrels of oil per day, which is more than double the publicly announced figure to help the sectors hit by the virus.
The US benchmark West Texas Intermediate crude oil rose nearly 2% to US $ 22.85 per barrel, and the international benchmark Brent crude oil rose 1.5% to US $ 32.26 per barrel.
OPEC oil producers led by Saudi Arabia and allies led by Russia finalized a compromise agreement on Sunday, reducing production by nearly 10 million barrels per day from May.
The agreement aims to boost prices after months of severe declines. With the outbreak of COVID-19, demand has fallen because countries around the world have placed their populations in confinement.
The Saudi-Russian price war exacerbated the crisis, and both countries are expanding production as they try to maintain market share and weaken US shale oil producers.
After the announcement of production cuts, prices fluctuated, but traders were still nervous about the oversupply, as daily demand was estimated to have fallen by 25 million barrels.
Trump said on Monday that the reduction may be deeper than the overall figure-top producers are considering reducing daily production by 20 million barrels under the agreement.
“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.
He did not go into specifics.
Stephen Innes, Chief Global Market Strategist at AxiCorp, said that attention was still firmly on how much demand would collapse due to the pandemic.
“That has yet to be quantified and means there are still downside risks to oil,” he said.