Oil prices were up about $1 a barrel on Tuesday on expectations that major producers will agree to extend output cuts during a video conference likely to be held this week and as countries and U.S. states begin to restart after coronavirus lockdowns.
The Organization of the Petroleum Exporting Countries and others including Russia, a grouping known as OPEC+, are considering extending their production cuts of 9.7 million barrels per day (bpd), or about 10% of global production, into July or August, at a meeting expected to be held on June 4.
"Most likely, OPEC+ could extend current cuts until Sept. 1, with a meeting set before then to decide on next steps," said Citi's head of commodities research Edward Morse.
Under the original OPEC+ plan, the cuts were due to run through May and June, scaling back to a reduction of 7.7 million bpd from July to December.
Saudi Arabia has been pushing to keep the deeper cuts in place for longer, sources said.
The gradual reopening of businesses in a growing number of U.S. states and countries around the world after shelter-in-place mandates caused by the coronavirus pandemic also oil boosted prices.
"As the economy opens up, there's more and more people on the road. That's going to be good, obviously, for crude oil," said Bob Yawger, director of energy futures at Mizuho in New York.
Steadily increasing gasoline demand in the United States and falling crude inventories at the nation's oil storage hub in Cushing, Oklahoma, has also supported prices, Yawger said.
Industry group American Petroleum Institute will release its weekly oil inventory report later in the day, with official data following on Wednesday.