Brent oil rose 1 percent on Tuesday after top exporter Saudi Arabia said it was determined to end a supply glut, while prices also drew support from forecasts of a further drop in U.S. crude inventories as well as nervousness over tensions in Iraqi Kurdistan.
The oil market has been concerned that, once the supply deal expires, producers will ramp up shipments again and cause prices to fall.
Minister Khalid al-Falih, told Reuters at an investor conference in Riyadh on Tuesday that global oil demand is expected to grow by 45 percent by 2050 despite an international push for using more renewable sources of energy.
“Expectations of increased demand continue to provide support for higher prices,” said Gene McGillian, manager of market research at Tradition Energy. “There’s nervousness (about Kurdistan) in the market, but I think that the production cut ... is really driving traders.”
“The market continues to have an upward bias.”
Brent crude, the global benchmark, settled up 96 cents or 1.7 percent to $58.33 a barrel. U.S. crude settled up 57 cents or 1.1 percent to $52.47.
The Organization of the Petroleum Exporting Countries (OPEC), plus Russia and nine other producers, have cut oil output by about 1.8 million barrels per day (bpd) since January. The pact runs to March 2018 and they are considering extending it.
Prices also drew support from expectations U.S. crude inventories will show a drop of 2.5 million barrels in the latest weekly supply reports, which would be the fifth straight week of declines and a sign the OPEC-led cut is working.