TOKYO- Oil prices rose on Wednesday to their highest since February 2020 after Saudi Arabia agreed to reduce output more than expected in a meeting with allied producers, while industry figures showed US crude stockpiles were down last week.
Brent crude rose as much as nearly 1 percent to $54.09 a barrel, the highest since Feb. 26, 2020. It was at $53.87 a barrel after jumping 4.9 percent on Tuesday.
US West Texas Intermediate (WTI) futures reached $50.24 a barrel, also the highest since Feb. 26, before slipping to $50. The contract on Tuesday closed up 4.6 percent.
Saudi Arabia, the world’s biggest oil exporter, agreed on Tuesday to make additional, voluntary oil output cuts of 1 million barrels per day (bpd) in February and March, after a meeting with the Organization of the Petroleum Exporting Countries (OPEC) and other major producers that form the group known as OPEC+.
The reductions agreed by Saudi Arabia were included in a deal to persuade other producers in the OPEC+ group to hold output steady.
With coronavirus infections spreading rapidly in many parts of the world producers are trying to support prices as demand takes a hit from new lockdowns being put in place.
“Despite this bullish supply agreement, we believe Saudi’s decision likely reflects signs of weakening demand as lockdowns return,” Goldman Sachs said in a note, although the investment bank maintained its year-end 2021 forecast for Brent of $65 a barrel.
