12.05.202010:20:00UTC+00Oil Prices Climb As Saudi Arabia Deepens Output Cuts

Oil prices climbed on Tuesday after an unexpected commitment from Saudi Arabia to deepen production cuts.

Benchmark Brent crude rose by 49 cents, or 1.7 percent, to $30.12 a barrel, while U.S. West Texas Intermediate (WTI) crude futures were up 90 cents, or 3.7 percent, at $25.04.

Saudi Arabia ordered state-owned oil company Aramco to slash production by an additional 1 million barrels per day in June to ease a global supply glut that has ravaged prices this year.

The output cut will lower Saudi production to about 7.5 million barrels per day, down nearly 40 percent from April. Under the OPEC+ agreement, Saudi Arabia agreed to lower production to around 8.5 million barrels per day.

"The kingdom aims through this additional cut to encourage OPEC+ participants, as well as other producing countries, to comply with the production cuts they have committed to, and to provide additional voluntary cuts, in an effort to support the stability of global oil markets," a Saudi energy minister said in a statement.

The cuts, combined with signs that gasoline demand is picking up may ease pressure on crude storage capacity.

Investors now await the release of inventory reports from the American Petroleum Institute industry group later today and the U.S. Energy Information Administration on Wednesday for further direction.